Audit and Assurance | Assignment-2

Running head: AUDIT AND ASSURANCE
Audit and assurance
Name of the Student
Name of the University
Author Note

AUDIT AND ASSURANCE
Table of Contents
Answer to requirement 1:...........................................................................................................2
Answer to requirement 2:...........................................................................................................2
Answer to requirement 3:...........................................................................................................3
Answer to requirement 4:...........................................................................................................3
Answer to requirement 5:...........................................................................................................5
References list:...........................................................................................................................7

AUDIT AND ASSURANCE
Answer to requirement 1:
During the process of risk assessment, analytical procedures are performed by the
auditors that helps in identification of the aspects which they are not acquainted with. With
the help of such procedures, the material misstatement items in the financial statement and
the risks associated with it can be identified. The existence of any unusual transactions and
any trend identifying the matters impacting audit or any events and ratios might be identified
using such analytical procedures. In the given case, the risk of material misstatement can be
assessed by identifying any unexpected or unusual relationship (Persich et al. 2018). In the
case of Morris limited, auditors analyses the risk of any items that are materially stated and
any unusual relationship between the manufacturer of inventory, shipping company and the
company itself. However, with the help of such procedures, a broad initial indication is
provided to the auditor regarding the existence of material misstatement. The results of the
analytical procedures is evaluated and understood by the auditors using the combination of
such results and other information gathered during the process (Brazel et al. 2016).
Answer to requirement 2:
Professional skepticism is the attitude of auditors having questioning mind who does
not simply accept the audit evidence and information provided at face value. Such attitude
make the auditors critically assess the evidence of audit and alert to any conditions implying
any misstatements due to error or fraud. It is critical for the auditors to perform and planning
the auditing with professional skepticism and this would assist them in recognizing the
existence of circumstances resulting in the material misstatement of the financial statements.
At the planning stage of audit, when performing the procedures of risk assessment, auditors
are required to be sceptical (Auasb.gov.au 2020).