ACCT 3005 Auditing Theory and Practice Assignment
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Auditing Theory and Practice (ACCT 3005)
Added on 2020-05-16
ACCT 3005 Auditing Theory and Practice Assignment
Auditing Theory and Practice (ACCT 3005)
Added on 2020-05-16
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Running head: ISSUES IN AUDITING Issues in auditingName of the studentName of the universityAuthor note
AUDITING THEORY AND PRACTICE 1Table of Contents1.0Audit planning.................................................................................................................21.1 Analytical review.............................................................................................................21.2 Preliminary judgement for materiality.............................................................................22.0First account selected – Gross profit margin...................................................................32.1 Rational for selection.......................................................................................................32.2 Assertion and explanation................................................................................................32.3Recommended audit procedure...................................................................................33.02nd account selected – Net profit.....................................................................................43.1 Rational for selection.......................................................................................................43.2 Assertion and explanation................................................................................................43.3 Recommended audit procedure........................................................................................44.0Third account selected – Inventory.................................................................................54.1 Rational for selection.......................................................................................................54.2 Assertion and explanation................................................................................................54.3 Recommended audit procedure........................................................................................55.0Fourth account selected – Wages....................................................................................65.1 Rational for selection.......................................................................................................65.2 Assertion and explanation................................................................................................65.3 Recommended audit procedure........................................................................................66.0Fifth account selected – Superannuation.........................................................................7
AUDITING THEORY AND PRACTICE 26.1 Rational for selection.......................................................................................................76.2 Assertion and explanation................................................................................................76.3 Recommended procedure.................................................................................................77.0 Sixth account selected – Other income................................................................................87.1 Rational for selection.......................................................................................................87.2 Assertion and explanation................................................................................................87.3 Recommended procedure.................................................................................................8Reference....................................................................................................................................9
AUDITING THEORY AND PRACTICE 31.0Audit planning Audit planning is the procedure under which various strategies are developed forconducting the projected result that also defines the audit scope within the company. Thenature, size and time for audit plan can be varied. It further depends on the size of thebusiness. If the company has large scale business the planning of strategies and theirimplementation will take large time and overall scope of the audit may also go up (King andOracle International Corp 2014). Further the audit plan includes the plan for assessing therisk and responses to those risks for analysing the material misstatement. However, the planis not discrete phase of the audit rather it is the iterative and continuous process that startedimmediately after the completion of previous audit and then continues till the completion ofcurrent audit.1.1 Analytical review It is the auditing process based on the ratios among the accounts and it tries torecognize the significant changes. This can be useful in focussing the general areas underwhich the financial statements are not correct or where the transactions are misclassified.Once the evaluation recognizes the concern areas, the auditor shall conduct furtherinvestigation for focussing on the source of underlying concerns (Moeller 2013). Theprocedure of analytical review includes the comparison of the ratios or recorded amountswith the expectation developed by auditor. The expectations are developed by the auditorthrough identification prior period financial information, anticipated results and availableinformation. 1.2 Preliminary judgement for materialityPreliminary judgement regarding materiality is established by the auditor throughchoosing the base that is multiplied by the percentage factor for determining initial qualitative
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