Question

1. On the planning process, after defining the key risk, the next step is to determine the key control(s) relevant to this risk

(     ) Agree

(     ) Disagree,   give reason:

Answer 1

Answer:

The audit should be organized to cover adequately all aspects of the enterprise relevant to the financial statement being audited. To achieve the overall objectives the auditor should follow the standards of auditing.

Planning is not a discrete phase of an audit but a continuous & iterative process. planning includes consideration of the timing of certain activities and audit procedures.

At the level of the planning process, after defining the key risk involved, the next step is to determine the control relevant to the risk so that risk can be reduced. for example, procure to pay raw material is authorized to a single person then there is a huge risk involved but if the different process of procuring to pay is segregated then in this way risk can be reduced.

for each segment of the audit, the auditor should conduct a detailed risk & control assessment. list the risk that must be reviewed in the segment, capture for each risk & control which exists, or that are needed to protect the risk.

In the planning process, after defining the key risk, the next step is to determine the key control(s) relevant to this risk is correct & accordingly, agreed with this statement.