Issues in Audit Practice

Running head: ISSUES IN AUDIT PRACTICE
Issues in audit practice
Name of the student
Name of the university
Author note

ISSUES IN AUDIT PRACTICE 1
Table of Contents
1.0 Introduction.....................................................................................................................3
1.1 Analytical review.............................................................................................................3
1.2 Preliminary judgement for materiality.............................................................................4
2.0 Analytical review through trend analysis........................................................................5
3.0 Accounts considered for material misstatement..................................................................5
3.1.1 First account selected – Sales........................................................................................5
3.1.2 Rational for selection....................................................................................................5
3.1.3 Assertion and explanation.............................................................................................5
3.2 Second account selected – Consultancy Fees..............................................................6
3.2.1 Rational for selection....................................................................................................6
3.2.2 Assertion and explanation.............................................................................................6
3.3 Third account selected – Depreciation.............................................................................6
3.3.1 Rational for selection....................................................................................................6
3.3.2 Assertion and explanation.............................................................................................7
3.4 Fourth account selected – Wages.....................................................................................7
3.4.1 Rational for selection....................................................................................................7
3.4.2 Assertion and explanation.............................................................................................7
4.0 Audit procedure....................................................................................................................8
4.1 Audit procedure for sales.................................................................................................8
4.2 Audit procedure for consultancy fees..............................................................................8

ISSUES IN AUDIT PRACTICE 2
4.3 Audit procedure for depreciation.....................................................................................8
4.4 Audit procedure for wages...............................................................................................8
5.0 Fraud....................................................................................................................................9
Reference..................................................................................................................................10

ISSUES IN AUDIT PRACTICE 3
1.0 Introduction
Audit planning is the process under which strategies are designed for conducting the
estimated outcome those are also considered as the audit scope within the entity. The time,
nature and extent of the plan may vary with the nature of the company and the industry in
which it conducts its operation. For instance, if the business is operated on large scale, the
strategies and its implementation will take longer times and the accordingly the overall audit
scope will be increased. The audit plan is the step by step methods under which the audit
controls are reviewed for the internal environment and financial process in addition to
preparation of engagements (Louwers et al. 2015). The report will highlight the basis on
which the preliminary judgements with regard to materiality will be established. Further, on
the basis of materiality level few material items will be selected from the income statement.
Further, the report will focus on the fraud that may involve in the financial statements of
Fawn Enterprise.
1.1 Analytical review
Analytical review is the procedure through which the entity or auditor analyse the
financial statement or accounting procedure of the company for identifying the irregularities,
if any. The procedure involves comparison of the non-financial as well as financial
information of the entity through trend analysis or ratio computation (Glover and Prawitt
2014). Generally, the analytical review leads to the audit if any irregularities or odd
information, if any, found. The analytical procedures includes the following processes –
 Reading the important documents and analysing the financial as well as accounting
impacts
 Reviewing the accounting activity among the period of interim period and year end
period.