Chapter 6: Audit Responsibilities and Objectives
Objectives
After studying this chapter, you should be able to:
- Explain the objective of conducting an audit of financial statements.
- Distinguish management's responsibilities for preparing financial statements from the auditor's responsibilities for verifying those financial statements.
- Explain the auditor's responsibility for discovering material misstatements.
- Classify transactions and account balances into financial statement cycles and identify benefits of a cycle approach to segmenting the audit.
- Describe why the auditor obtains a combination of assurance by auditing classes of transactions and ending balances in accounts.
- Distinguish among the five categories of management assertions about financial information.
- Link the six general transaction-related audit objectives to the five management assertions.
- Link the nine general balance-related audit objectives to the five management assertions.
- Explain the relationship between audit objectives and the accumulation of audit evidence.
Chapter 7: Audit Evidence
Objectives
After studying this chapter, you should be able to:
- Contrast audit evidence with evidence used by other professions.
- Identify the four audit evidence decisions that are needed to create an audit program.
- Specify the characteristics that determine the persuasiveness of evidence.
- Identify and apply the seven types of evidence used in auditing.
- State the purposes of analytical procedures and the timing of each purpose.
- Select the most appropriate analytical procedure from among the five major types.
- Explain the benefits of using statistical techniques and computer software for analytical procedures.
Chapter 8: Audit Planning and Documentation
Objectives
After studying this chapter, you should be able to:
- Discuss why adequate audit planning is essential.
- Preplan the audit.
- Obtain appropriate background information about an audit client.
- Obtain information about an audit client's legal obligations.
- Discuss the nature and purposes of preliminary analytical procedures.
- Understand the purposes of audit working papers.
- Prepare organized audit working papers.
Chapter 9: Materiality and Risk
Objectives
After studying this chapter, you should be able to:
- Apply the concept of materiality to the audit.
- Make a preliminary judgment about what amounts to consider material.
- Allocate preliminary materiality to segments of the audit during planning.
- Use materiality to evaluate audit findings.
- Define risk in auditing.
- Describe the audit risk model and its components.
- Consider the impact of business risk on acceptable audit risk.
- Consider the impact of several factors on the assessment of inherent risk.
- Discuss risk for segments and measurement difficulties.
- Discuss how materiality and risk are related and integrated into the audit process.
Chapter 10: Internal Control and Control Risk
Objectives
After studying this chapter, you should be able to:
- Contrast management's need for internal control with the auditor's need to consider internal control when designing an audit.
- Explain the five components of internal control.
- Explain methods used to obtain an understanding of internal control.
- Assess control risk by linking strengths and weaknesses of internal control to transaction-related audit objectives.
- Describe the process of designing and performing tests of controls.