Category Archive for: Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment

Differences Between Risk Assessment Procedures And Tests Of Controlss

– In risk assessment procedures evidence is obtained only by tracing a few transactions through the system. In testing operating effectiveness the auditor obtains sufficient evidence – In risk assessment procedures the evidence obtained only through inquiry. In tests of controls only if quires is not sufficient – Risk assessment procedures include inquiry, analytical procedures, inspection…

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AUDITOR’S INTERESTIN INTERNALCONTROLS

Internal control system means the policies and procedures established to assist in achieving management objectives and comprises of ( a ) control environment and (b) control procedures. The auditor is concerned with those policies and procedures which relate to record, summarize and report financial data consistent with assertions embodied in fmancial statements. It follows that the…

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NATURE OF RISKS AND INTERNAL CONTROL CHARACTERISTICS WHICH DISTINGUISH IT CO TROLS FROM MANUAL SYSTEM

Following are certain internal control characteristics that distinguish CLS from manual system. (1) Lack of audit trail in computer generated data. Audit trail is a series of audit evidences provided through chain of documents and -cross-referencing connecting balances per trial balance with orrgina! transactions. If the chain of evidence relating to a particular account balance is broken…

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Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment

INTRODUCTION This chapter discusses: •   Risk assessment procedures and sources of information about the entity and its environment. including its internal controls. (Risk assessment procedures) •   Understanding the entity and its environment, Internal control •   Assessing the risk of material misstatement •   Communicating weakness in internal controls •   Documentation of accounting…

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