Scribd
Upload
108 views

PSA 330 Script Report

The auditor's overall responses to address risks of material misstatement at the financial statement level may include emphasizing the need for professional skepticism to the audit team, assigning more experienced staff or those with specialized skills, providing more supervision, or incorporating additional elements of unpredictability in selecting further audit procedures. Additionally, the auditor may make general changes to the nature, timing, or extent of further audit procedures, such as performing substantive procedures at period end instead of an interim date.

Uploaded by

Karlo Paler
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
108 views

PSA 330 Script Report

The auditor's overall responses to address risks of material misstatement at the financial statement level may include emphasizing the need for professional skepticism to the audit team, assigning more experienced staff or those with specialized skills, providing more supervision, or incorporating additional elements of unpredictability in selecting further audit procedures. Additionally, the auditor may make general changes to the nature, timing, or extent of further audit procedures, such as performing substantive procedures at period end instead of an interim date.

Uploaded by

Karlo Paler
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

The auditor's overall responses to address the assessed risks of material misstatement at the financial

statement level may include emphasizing to the audit team the need to maintain professional
skepticism in gathering and evaluating audit evidence, assigning more experienced staff or those with
specialized skills or using specialists, providing more supervision, or incorporating additional elements of
unpredictability in the selection of further audit procedures to be performed. Additionally, the auditor
may make general changes to the nature, timing, or extent of further audit procedures as an overall
response, for example, performing substantive procedures at period end instead of at an interim date.

Emphasizing the audit team the need to maintain professional skepticism

The auditor shall maintain professional skepticism throughout the audit, recognising the possibility that
a material misstatement due to fraud could exist, in spite of the auditor’s past experience of the honesty
and integrity of the entity’s management and those charged with governance

Assigning more experienced staff or those with special skills or using experts

A broad range of skills and expertise and ongoing professional development are critical to the formation
and maintenance of an effective internal audit activity. Essential elements include in-depth knowledge
of the organization's industry and internal audit standards and best practices; technical understanding
and expertise; knowledge of skills for implementing and improving processes in both financial and
operational areas; strong communication and presentation skills; and professional certification, e.g. CIA.

Incorporating additional elements of unpredictability in the selection of further audit procedures to


be performed

because individuals within the entity who are familiar with the audit procedures normally performed on
engagements may be better able to conceal fraudulent financial reporting.

Making general changes to the nature, timing and extent of audit procedures

Making general changes to the nature, timing, or extent of audit procedures, for example: performing
substantive procedures at period end instead of at an interim date; or modifying the nature of audit
procedures to obtain more persuasive audit evidence.

The nature of the specific controls used by the entity and in particular whether they are manual or
automated.

In all audits, the auditor should obtain an understanding of internal control sufficient to plan the audit
by performing procedures to understand the design of controls relevant to an audit of financial
statements and determining whether they have been placed in operation. In obtaining this
understanding, the auditor considers how an entity’s use of information technology (IT) fn 2 and manual
procedures may affect controls relevant to the audit.

Purpose = Test of Controls or Substantive Procedures

Type = Inspection, Observation, Inquiry, Confirmation, Recalculation, Reperformance or Analytical


Proceduresn.
The nature of further audit procedures refers to their purpose (tests of controls or substantive
procedures) and their type, that is, inspection, observation, inquiry, confirmation, recalculation,
reperformance, or analytical procedures. Certain audit procedures may be more appropriate for some
assertions than others.

In addition, certain audit procedures can be performed only at or after the period end, for example:

Agreeing the financial statements to the accounting records;

Examining adjustments made during the course of preparing the financial statements; and

Procedures to respond to a risk that, at the period end, the entity may have entered into improper
sales contracts, or transactions may not have been finalized.

Timing refers to when audit procedures are performed or the period or date to which the audit
evidence applies.

Certain audit procedures can be performed only at or after period end, for example, agreeing the
financial statements to the accounting records, or examining adjustments made during the course of
preparing the financial statements. If there is a risk that the entity may have entered into improper sales
contracts or that transactions may not have been finalized at period end, the auditor should perform
procedures to respond to that specific risk. For example, when transactions are individually material or
an error in cutoff may lead to material misstatement, the auditor should inspect transactions near the
period end.

Extent

Extent refers to the quantity of a specific audit procedure to be performed, for example, a sample size
or the number of observations of a control activity. The extent of an audit procedure is determined by
the judgment of the auditor after considering the tolerable misstatement, the assessed risk of material
misstatement, and the degree of assurance the auditor plans to obtain

The auditor’s risk assessment includes an explanation of the operating effectiveness of controls

When the substantive procedures alone do not provide sufficient appropriate audit evidence at the
assertion level.

The auditor should perform tests of controls when the auditor's risk assessment6 includes an
expectation of the operating effectiveness of controls or when substantive procedures alone do not
provide sufficient appropriate audit evidence at the relevant assertion level.

Testing the operating effectiveness of controls includes obtaining evidence about:

Testing the operating effectiveness of controls is different from obtaining audit evidence that controls
have been implemented. When obtaining audit evidence of implementation by performing risk
assessment procedures, the auditor should determine that the relevant controls exist and that the
entity is using them. When performing tests of controls, the auditor should obtain audit evidence that
controls operate effectively. This includes obtaining audit evidence about how controls were applied at
relevant times during the period under audit, the consistency with which they were applied, and by
whom or by what means they were applied. If substantially different controls were used at different
times during the period under audit, the auditor should consider each separately. The auditor may
determine that testing the operating effectiveness of controls at the same time as evaluating their
design and obtaining audit evidence of their implementation is efficient.

You might also like