Assignment on Auditing Theory & Practice

Added on - 16 May 2020

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Running head: ISSUES IN AUDITINGIssues in auditingName of the studentName of the universityAuthor note
AUDITING THEORY AND PRACTICE1Table of Contents1.0Audit planning.................................................................................................................31.1 Analytical review.............................................................................................................31.2 Preliminary judgement on materiality..............................................................................32.0First account selected – Gross profit margin...................................................................42.1 Rational for selection.......................................................................................................42.2Assertion and explanation...........................................................................................42.3Recommended audit procedure...................................................................................43.02ndaccount selected – Net profit.....................................................................................53.1 Rational for selection.......................................................................................................53.2 Assertion and explanation................................................................................................53.3 Recommended audit procedure........................................................................................54.0Third account selected – Inventory.................................................................................64.1Rational for selection...................................................................................................64.2Assertion and explanation...........................................................................................64.3. Recommended audit procedure.......................................................................................65.0Fourth account selected – Wages....................................................................................75.1 Rational for selection.......................................................................................................75.2 Assertion and explanation................................................................................................75.3 Recommended audit procedure........................................................................................76.0Fifth account selected – Superannuation.........................................................................7
AUDITING THEORY AND PRACTICE26.1 Rational for selection.......................................................................................................76.2 Assertion and explanation................................................................................................86.3 Recommended procedure.................................................................................................87.0 Sixth account selected – Other income................................................................................87.1 Rational for selection.......................................................................................................87.2 Assertion and explanation................................................................................................87.3 Recommended procedure.................................................................................................9Reference..................................................................................................................................10
AUDITING THEORY AND PRACTICE31.0Audit planningAudit plan is particular guideline required to be followed while conducting the audit.It assists the auditor to obtain the appropriate and sufficient evidence for carrying out theaudit with minimum level of cost. It further assists in avoiding the misunderstanding withclient. Audit plan is the major part of the audit procedure for external as well as internalaudit. If the audit procedure is planned in an effective way it can minimize the risk, meet theobjectives, and improve the efficiency with minimum effort(Kerr 2013). The auditors arerequired to prepare the appropriate audit plan for ensuring the recognition of all the identifiedaudit risk and correct the strategy that are deployed for detecting all the concerned risk areas.1.1 Analytical reviewAnalytical review includes the evaluation of the financial information through theanalysis of non-financial as well as financial data. Analytical review is carried out forobtaining the understanding of business and the environment. The main objective of thisreview is to analyse the risk with regard to material misstatement for determining the timing,audit procedure required and nature of audit(Luippold and Kida 2012). It will assist theauditor to develop the audit programme and strategies.1.2 Preliminary judgement on materialityPreliminary judgement on materiality is maximum value by which auditor believesthat the statements are misstated and still will not have impact on the decisions of thereasonable users. It is one of the most crucial decisions taken by the auditor. It requiressignificant professional judgement(Stewart and Kinney Jr 2012). Various factors taken intoconsideration while making the judgements are –Bases are required for analysing the materiality
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