Phases of the Audit Process

1. Pre- engagement
2. Audit Planning
3. Study and Evaluation of Internal Controls
4. Substantive Testing
5. Completing the Audit
6. Issuance of the Audit Report
7. Post-Audit Responsibilities

1. Pre- engagement
- carrying out initial audit activities, such as client acceptance and continuance, and
agreement on the terms of engagement
o engagement letter p. 235
o prospective client evaluation form p. 232
2. Audit Planning
- developing an over-all audit strategy and preparing the detailed audit plan
- major audit planning activities
o obtaining an understanding of the client and its environment
o assessing the possibility of non-compliance
o establishing materiality and assessing risk
o identifying related parties
o performing preliminary analytical procedures
- p. 255
3. Study and Evaluation of Internal Controls
- documenting and evaluating the auditor’s understanding of the internal control structure of
the client
- based on the understanding of internal control, the auditor assesses risk and determines the
appropriate audit approach
- p. 297
- 5 Steps
o Obtain an understanding of the client’s internal control
o Make a preliminary assessment of control risk
o Make the appropriate responses to the assessed risk of material misstatement
o Reassess control risk
o Determine the nature, extent and timing of substantive tests
-
4. Substantive Testing
- gathering of evidence by performing substance audit procedures
- p. 349
5. Completing the Audit
 - wrapping-up procedures and review of audit conclusions prior to issuance of the audit
report
- p. 439
- Procedures performed
o Performing final analytical procedures
o Reviewing the working papers and drawing conclusions on results of audit
procedures performed
o Obtaining the approval of the client regarding disclosures and any adjustments
made to the financial statements
o Evaluation of the overall financial statement presentation
o Review of other information or document that contain the audited financial
statements an ascertain their consistency
6. Issuance of the Audit Report
- preparation and issuance of the audit report
- reporting consideration in an audit of financial statements
o emphasis of matter paragraph and other matter paragraph
o substantial doubt regarding going concern
o significant uncertainties
o comparative financial statements
o using the work of another auditor
o using the work of an expert
o initial audit engagements and opening balances
o subsequent events
o dual-dating
o re-issued financial statements
o offering securities to the public
o other information in documents containing audited financial statements
o supplementary information presented with financial statements
- p. 469
7. Post-Audit Responsibilities
- debriefing