Trắc nghiệm ôn kiểm toán giữa kỳ

TON DUC THANG UNIVERSITY FACULTY OF ACCOUNTING Chapter 2:
Audit planning and risk assessment Course code: 201106 1/29/2024
201106- Planning and risk assessment 1 Learning objectives
 Understand an audit process
 Understand risk assessment procedures
 Assess risks of misstatements
 Understand the concept of materiality 1/29/2024
201106- Planning and risk assessment 2 Contents 2.1 Audit process
2.2 Identifying and responding to the risk of misstatements 1/29/2024
201106- Planning and risk assessment 3 2.1 Audit process Audit Audit Audit preparation performing finishing 1/29/2024
201106- Planning and risk assessment 4 Audit preparation
1) Preliminary Engagement Activities 2) Overall Audit Strategy 1/29/2024
201106- Planning and risk assessment 5 Audit preparation
1) Preliminary Engagement Activities
a) Client Acceptance or Continuance
b) Compliance with Independence and Ethical Requirements c) Engagement Letters 1/29/2024
201106- Planning and risk assessment 6 Audit preparation
a) Client acceptance and continuance
 Consider the integrity of management
 Professional competency of auditor team  Obey professional ethics 1/29/2024
201106- Planning and risk assessment 7 Audit preparation
b) Compliance with Independence and Ethical Requirements
 Identify threats to principles of ethics  Self-interest threat  Self-review threat  Advocacy threat  Familiarity threat  Intimidation threat
 Methods to reduce threats to acceptable levels 1/29/2024
201106- Planning and risk assessment 8 Audit preparation c) Engagement Letters
 When a new client is accepted or when an audit
engagement continues from year to year, an
engagement letter should be prepared.
 Serves as a means of reducing the risk of
misunderstandings with the client and as a means of
avoiding legal liability for claims that the auditors did not perform the work promised  Should include:
 Objectives of the engagement
 Management’s responsibilities
 Auditors’ responsibilities
 Any limitations of the engagement 1/29/2024
201106- Planning and risk assessment 9 Audit preparation 2) Overall audit strategy a)
The nature, timing and extent of planned risk assessment procedures;
b) The nature, timing and extent of planned further audit procedures. 1/29/2024
201106- Planning and risk assessment 10 Audit preparation
a) Risk assessment procedures:
Understand the entity and its environment
 Relevant industry, regulatory, and other external factors;  The nature of the entity;
 The entity’s selection and application of accounting policies;
 The entity’s objectives and strategies, and those related business risks;
 The measurement and review of the entity’s financial performance
 Understand internal control (Chapter 3)
 identify and assess the risks of material misstatement 1/29/2024
201106- Planning and risk assessment 11 11 Audit preparation Industry and External Regulatory Factors Environment
• The market and competition, • Accounting principles and including demand, capacity, industry-specific practices and price competition;
• Regulatory framework for a
• Cyclical or seasonal activity regulated industry • •
Product technology relating to Taxation the entity’s products • . Government policies • • Environmental requirements Energy supply and cost. 1/29/2024
201106- Planning and risk assessment 12 Audit preparation Nature of the entity
 Whether the entity has a complex structure
 The ownership, and relations between owners and other people or entities 1/29/2024
201106- Planning and risk assessment 13 Audit preparation
The entity’s selection and application of accounting policies
The methods the entity uses to account for significant and unusual transactions.
The effect of significant accounting policies in
controversial or emerging areas for which there is a lack of
authoritative guidance or consensus.
 Changes in the entity’s accounting policies.
 Financial reporting standards and laws and regulations
that are new to the entity and when and how the entity will adopt such requirements. 1/29/2024
201106- Planning and risk assessment 14 Audit preparation
The entity’s objectives and strategies, and those related business risks Business risk is broader than the risk of material
misstatement of the financial statements, though it includes
the latter. Business risk may arise from change or
complexity. A failure to recognize the need for change may
also give rise to business risk.  New products and services  Regulatory requirements  Expansion of the business  Current and prospective
 New accounting requirements financing requirements  Use of IT
 The effects of implementing a strategy 1/29/2024
201106- Planning and risk assessment 15 Audit preparation
The measurement and review of the entity’s financial performance
 The measurement and review of performance is directed
at whether business performance is meeting the
objectives set by management (or third parties).
 Monitoring of controls is specifically concerned with the
effective operation of internal control. 1/29/2024
201106- Planning and risk assessment 16 Case study
You are auditing Brownhouse Limited and are concerned
that a major problem facing the entity in the current year
is that its customer base has dropped by some 50 per
cent as a result of competition from a new entrant to the market. Required:
a. What are business risks would face Brownhouse?
b. Which information of financial statement is affected
by above identified business risks? 1/29/2024
201106- Planning and risk assessment 17 Audit preparation
b) Further audit procedures at the assertion level
 Tests of Controls: The auditor shall design and perform
tests of controls to obtain sufficient appropriate audit
evidence as to the operating effectiveness of relevant controls . 1/29/2024
201106- Planning and risk assessment 18 Audit preparation
b) Further audit procedures at the assertion level
Substantive Procedures: Tests are used to collect
evidence of material misstatement in financial statements. Include 2 types:  Analytical procedures
 Tests of detail: are the direct examination of the
transactions or account balances. 1/29/2024
201106- Planning and risk assessment 19 Risk assessment procedure Substantive Audit procedures procedures Tests of details Tests of controls Analytical procedures 20 1/29/2024
201106- Planning and risk assessment