Auditing Procedure Impact

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Added on 2020-04-15

Auditing Procedure Impact

Added on 2020-04-15

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ContentsImpact on audit procedure...............................................................................................................3Risk assessment...........................................................................................................................3Audit procedure...........................................................................................................................3Audit evidence.............................................................................................................................3Audit approaches.............................................................................................................................4References........................................................................................................................................52

Impact on audit procedure There are various factors which can affect the audit procedure conducted by auditors of acompany. In this part of the report, we will discuss three of these factors that are a Riskassessment, Audit procedures and Audit evidence. Risk assessmentFor preparing an efficient audit plan auditor should risk assessment procedure. Risk assessmentprocedure can be defined as a process of identification of areas of business which are more likelyto have material misstatement as compared to other areas. During the effective audit, processauditor should ensure that more importance is given to these areas. If there is ineffective riskassessment procedure then there is a chance that auditor may ignore such areas while preparingsamples for examination of books and accounts (Arens et.al, 2012). These areas should beincluded in samples so that sample represents the whole population. Audit procedure Auditor procedure adopted by an auditor during an audit is dependent upon the quality offinancial statement and books of accounts presented by the client. Auditor prepares auditprocedure to test the quality of financial statement so that he can obtain sufficient audit evidence.If proper audit procedures are not implemented by auditor then there is a high chance of thewrong opinion on such financial statements. For this purpose, the auditor should take writtenrepresentation from the management that all the transactions are being recorded in books ofaccounts. Audit evidence Audit evidence can be defined as the information and facts collected by an auditor of a companyto review companies internal control, books of accounts and financial statements. Main objectivecollection of audit evidence is to determine whether the financial statements and books ofaccounts are in line with applicable regulations and generally accepted accounting standards(Arens et.al, 2012). If sufficient audit evidence is not collected then there is the risk that auditopinion doesn’t reflect the true position of the company. 3

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Auditing Procedure Impact