Question

Discuss the steps used in the audit including:

                a. Plan an audit approach
                b. Tests of controls and substantive tests of transactions
                c. Perform substantive analytical procedures and tests of balances
                d. Completing the audit and issuing a report
                e. Other general auditor responsibilities

Answer 1

Steps used in the audita

1st. Plan an audit approach; the auditor should plan his work to enable him to conduct an effective audit in an efficient and timely manner.plan should be based on knowledge of the client's business.

2nd. Audit strategy. Audit strategy setd the scope ,timing and direction of the audit and guides the development of the more detailed audit plan

3rd RELATIONSHIP BETWEEN OVERALL AUDIT STRATEGY AND AUDIT PLAN

Once the overall audit strategy has been established, an audit plan can be developed to address the various matters identifi ed in the overall audit strategy, taking into account the need to achieve the audit objectives through the effi cient use of the auditor’s resources

4TH Tests of Control The auditor shall design and perform tests of controls to obtain sufficient appropriate audit evidence as to the operating effectiveness of relevant controls,In designing and performing tests of controls, the auditor shall obtain more persuasive audit evidence the greater the reliance the auditor places on the effectiveness of a control,,Determine whether the controls to be tested depend upon other controls (indirect controls), and if so, whether it is necessary to obtain audit evidence supporting the effective operation of those indirect controls

5th Perform substantive analytical procedures and tests of balances Substantive tests verify whether information is correct, whereas control tests determine whether the information is managed under a system that promotes correctness. Some level of substantive testing is required regardless of the results of control testing

in test of balances determin hether it is appropriate to use audit evidence about the operating effectiveness of controls obtained in previous audits, and, if so, the length of the time period that may elapse before retesting a control,

.6th Completing the audit and issuing a report;;auditor issue a report after he done his work and it is compalsory step.“a complete set of general purpose financial statements, including the related notes.” The related notes ordinarily comprise a summary of significant accounting policies and other explanatory information and any other information required to be included as part of the financial statements by the laws and regulations governing the entity. The requirements of the applicable reporting framework determine the form and content of the audit statements, and what constitutes a complete set of financial statements.

7th Other general auditor responsibilities;;the auditor’s responsibilities relating to other information, whether financial or non-financial information (other than financial statements and the auditor’s report thereon), included in an entity’s annual report. An entity’s annual report may be a single document or a combination of documents that serve the same purpose.If the auditor identifies that a material inconsistency appears to exist (or becomes aware that the other information appears to be materially misstated), the auditor shall discuss the matter with management.