PRACTICE AND REGULATION OF THE POWERS AND FUNCTIONS

ACCOUNTANCY PROFESSION ENTRANTS PRACTICE

Educational Institutions – Standards – Accounting
SCOPE OF PRACTICE Educational Technical (FSRSC) and Auditing
➢ 4 Sectors: Council (ETC) (AASC)
1. Public Practice Syllabi, LECPA Code of Conduct (Ethics)
2. Commerce and Industry Oath Quality Review
Certificate of Registration Investigations, Appropriate
3. Academe/Education
Actions
4. Government
OTHERS:
PUBLIC SERVICE RA 9298 and the IRR
Seal of the Board
➢ Client-Service Provider relationship; on a fee basis Administrative Supervision – under the Commission
➢ Individual/partner/staff member in an accounting (PRC)
or auditing firm; any service requiring application Custodian of Records – PRC
of accounting ang auditing skills and knowledge Secretariat and Support Services – provided by the
Commission (PRC)
COMMERCE AND INDUSTRY
Annual Report – ultimate user: President of the PH
➢ Private practice
➢ Employer-Employee relationship GROUNDS FOR SUSPENSION/REMOVAL OF
➢ Involved in decision-making; position held requires MEMBERS:
application of accounting and auditing skills and
knowledge 1. Neglect of Duty or incompetence
➢ Specific Provision (for supervisory level) – entities 2. Violation or tolerance of any violation of this act
with annual revenue of at least 10M and/or paid-in 3. Final judgment of crimes involving moral turpitude;
capital of at least 5M and
4. Manipulation or rigging of CPALE results,
ACADEME/EDUCATION disclosure of secret and confidential information,
➢ Teach subjects in the CPALE and other technically or tampering of grades
related subjects ➢ The President of the PH, upon the recommendation
➢ Specific Provision (for Deans and Department of the Commission, may suspend/remove any
heads) – must be a CPA: member
o Dean – exclusive department APPOINTMENT PROCESS:
o Department Head – together with other
courses ACCREDITED PROFESSIONAL ORGANIZATION
(APO):
GOVERNMENT

➢ Employer-Employee relationship
Philippine Institute of Certified Public
Accountants (PICPA)
o Employer – government, GOCCs, LGU, etc.
➢ Civil service eligibility as a CPA is a pre-requisite
➢ 5 nominees (per position)
REGULATION OF THE ACCOUNTANCY PROFESSION

President of the Philippines Professional Regulation Commission (PRC)

➢ 3 nominees (per position) – ranked in order of

Professional Regulation Commission priority
(PRC)

President of the Philippines

Professional Regulatory Board of Accountancy
(PR-BOA) ➢ 1 Chairman and 6 members

PROFESSIONAL REGULATORY BOARD OF

ACCOUNTANCY (PR-BOA)

➢ 1 Chairman + 6 Members – appointed by the

President of the Philippines
➢ Vice chairman elected among its members; 1-year
term
➢ Chairman and members – 3 years; successive
complete terms, lapse 1 year; max 12 years
 THE PRACTICE AND REGULATION OF THE PRACTICE OF ACCOUNTANCY
ACCOUNTANCY PROFESSION
➢ Corporation is NOT allowed to practice Public
➢ RA 9298: Philippine Accountancy Act of 2004 Accountancy
(May 13, 2004)
ACCREDITATION TO PRACTICE PUBLIC
o regulatory act; prospective application
ACCOUNTANCY
o involves entrants and those who practice
the profession Sole Proprietorship (firm) Name & Assoc., CPAs
Partnership Name & Co., CPAs
OBJECTIVES
(limited/general)
➢ the standardization and regulation of accounting Individual Name, CPA
education
➢ the examination or registration of CPAs; and
➢ Partnership Dissolution – can still use the old name
➢ the supervision, control, and regulation of the
o To Sole Proprietorship – 2 years max
practice of accountancy in the Philippines
o To Partnership – can retain name (no limit)
THE CPA LICENSURE EXAMINATION ➢ No fictitious name/specialization
➢ Certificate of Accreditation
➢ in accordance with RA 9298 – PRC Modernization o 3 years renewable
Act of 2000 ▪ Individual – birthdate + 3 years
REQUIREMENTS ▪ Firms/Partnership – SEC
Registration + 3 years
1. Certificate of Live Birth (PSA)
2. NBI Clearance MEANINGFUL EXPERIENCE
3. Degree Holder (retakes on or before October 2008) ➢ Public Practice
SCOPE OF EXAMINATION o at least 1 year as audit assistant
o at least 2 years as auditor-in-charge
1. AFAR ➢ Commerce and Industry
2. AUD o at least 3 years - supervisory (significant
3. FAR involvement)
4. MS ➢ Academe/Education
5. TAX o teaching at least 3 trimesters, 2 semesters
6. RFBT Board exam subjects; accumulated
teaching experience shall not be less than
RATING IN THE LICENSURE EXAMINATION
3 school years
PASSED General Average of at least
75%, no grades lower than SEAL
65% in any given subject ➢ Use of Seal – statement of Compliance
CONDITIONAL has obtained 75% and
above (4 out of 6) of the
subjects Name
*Refresher course – 24
units of accredited schools
REMOVAL EXAMINATION Shall take within 2 tears
from the preceding
examination
CPA

➢ Report of ratings – within 10 calendar days after

examination, unless extended for just cause Reg.No.
➢ Roster of CPAs – delegated to PICPA
➢ Certificate of Registration – lifetime validity

PROFESSIONAL IDENTIFICATION CARD (PIC) ENFORCEMENT OF THE ACT

➢ 3 years renewable ➢ BOA > PRC

➢ Renewal: on or before expiration – birthdate + 3 ORGANIZATIONS DISCUSSED UNDER RA 9298
years
FSRSC 1 Chairman + 15 members
CONTINUING PROFESSIONAL DEVELOPMENT (BBB CAMSI) *Chairman – any scope
(CPD) AASC 1 Chairman + 17 members
➢ RA 10912 – Continuing Professional Development (BAB CASI) *Chairman – public practice
QRC 1 Chairman + 6 members
Act of 2016
*QUALITY
Renewal of PIC 15 units *Chairman – public practice
For Accreditation (initial 120 units ETC 1 Chairman + 6 members
and renewal) *Chairman – academe/education
➢ Term: 3 year-term, renewable for another term
 PHILLIPINE ISTITUTE OF CERTIFIED PUBLIC ➢ Intended to assist members in understanding the
ACCOUNTANTS (PICPA) difference between right and wrong and in applying
that understanding in their decisions
➢ 15 national directors – adequate chapters/regions
➢ Applied when an individual has to decide from
in major areas in the Philippines (NCR, Luzon,
various alternatives regarding moral principles
Visayas, Mindanao)
FOUR BASIC NEEDS: (CPQC)
PRC CPE (CPD) COUNCIL
1. Credibility – reliable information
➢ Created by the Board, upon approval of PRC
2. Professionalism – acknowledged to be an expert in
➢ Shall assist in implementing its CPE (CPD) program
the field
➢ 1 chairperson + 2 members
3. Quality of Services – render high quality services
o Chairperson – among the members of BOA
4. Confidence
o First member – either the President or any
officer chosen by the BOD of PICPA STANDARD-SETTING BODIES
o Second member – either the President or
➢ Mastery of a particular intellectual skill, acquired
any officer of the organizations of
by training and education
deans/department heads of an
➢ Adherence by its members to a common code of
educational institution
values and conduct established by its
➢ Term of officer – co-terminus with their respective
administrating body, including maintaining an
incumbency in BOA, PICPA, and organization
outlook which is essentially objective
PICPA CPE (CPD) COUNCIL ➢ Acceptance of a duty to society as a whole

➢ The PRC CPE (CPD) Council may delegate to the ADOPTION OF THE CODE
PICPA:
➢ Board – administrating body
o Processing of the application
o Has the power and function to prescribe
o Keeping all records
and/or adopt Code of Ethics for the
o Any other related functions
Practice of Accountancy
ORGANIZATIONS AFFECTING THE ACCOUNTANCY
PICPA recommended to BOA
PROFESSION

REGULATORY GOVERNMENT AGENCIES

International Federation of Accountants (IFAC)
1. PRC ➢ International Ethics Standards Board of
2. BOA Accountancy (IESBA)
3. COA – PH Supreme Audit Institution ➢ International Accounting Standards Board (IASB)
4. SEC ➢ International Auditing and Accounting Standards
5. BIR Board (IAASB)
6. BSP
7. IC WORK GROUPS
PROFESSIONAL ORGANIZATIONS

1. Association of CPAs in Public Practice (ACPAPP) Discussion Exposure Drafts Public

2. Association of CPAs in Commerce and Industry Papers (Stakeholders)
(ACPACI) Accounting
3. National Association of CPAs in Academe or Standards: FSRSC Provide
Education (NACPAE) (majority) comments,
4. Government Association of CPAs (GACPA) suggestions, and
Auditing Standards: recommendations
STANDARD-SETTING BODIES AASC (majority)
1. FSRSC
*Exposure period:
2. AASC
Accounting – 60 days
CODE OF ETHICS FOR PROFESSIONAL Auditing – 90 days
ACCOUNTANTS IN THE PHILIPPINES XPN: Urgent
date/need to adopt –
ETHICS 30 days
➢ Based in well-founded standards of right and
wrong that prescribed what humans ought to do
➢ Rights, obligations, benefits to society, fairness or BOA Final Draft
specific virtues
➢ System of moral principles For approval Approval:
FSRSC – majority
CODE OF ETHICS AASC – at least 10 members of
the council
➢ Represents a set of moral principles, rules of
conduct/values
 CODE AS BASIC PRINCIPLES ➢ Bias:
o Anchoring Bias – initial piece of info as an
➢ Consider ethical requirements as the basic
anchor against subsequent info
principles which they should follow in performing
o Automation Bias – favor output generated
their work
from automated systems
PURPOSE o Availability Bias – available info
o Confirmation Bias – existing beliefs
➢ Public interest responsibility o Groupthink – group of individuals
o Collective well-being of the community of discourage individual
people and institutions the CPA serves creativity/responsibility
PART 1: COMPLYING WITH THE CODE, o Overconfidence Bias – overestimate one’s
FUNDAMENTAL PRINCIPLES AND CONCEPTUAL ability
FRAMEWORK o Representation Bias – base info that is
assumed to be representative
COMPLYING THE CODE o Selective Perception – influence of
➢ Conflicting requirements of two countries – with person’s expectation
STRICTER provisions CONSIDERATION FOR ASSURANCE
➢ Conflict with Local Laws – NATIONAL requirement ENGAGEMENTS
prevails
1. Firm Culture
BREACH OF THE CODE (EAR) 2. Independence
➢ Evaluate significance a. Independence of Mind – state of mind that
➢ take Actions permits the expression of a conclusion
➢ determine whether to Report b. Independence of Appearance – avoidance
of facts and circumstances that are so
FUNDAMENTAL PRINCIPLES (COBID) significant
3. Profession Skepticism
➢ Confidentiality – with appropriate consent
➢ Objectivity – no bias, conflict of interest/undue FORMING OVERALL CONCLUSION
influence of others
➢ professional Behavior – comply with relevant laws ➢ “step back” through the ff:
and regulations; proper conduct o Review any significant judgments made or
➢ Integrity – straightforward and honest conclusions reached; and
➢ professional competence and Due care – o Use the reasonable and informed third-
professional knowledge and skill; act diligently party test

CONCEPTUAL FRAMEWORK PART 2: PROFESSIONAL ACCOUNTANTS IN

BUSINESS (PAIB)
➢ Three-step approach:
➢ Working in commerce, industry, service, the public
Step Discussion sector, education, not-for-profit sector, regulatory
1. IDENTIFYING Intimidation threat – actual or or professional bodies
(IFASS) perceived pressures ➢ Employee, contractor, partner, director (executive
or non-executive), owner-manager, volunteer
Familiarity threat – long or close
relationship SENIOR PAIB

Advocacy threat – promote a client ➢ Director, officer or senior employee, top level
or employing organization’s management
position ➢ Able to exert significant influence over making
decisions
Self-review threat – previous
PART 3: PROFESSIONAL ACCOUNTANTS IN PUBLIC
judgment made
PRACTICE (PAPP)
Self-interest threat – ➢ Professional accountant, irrespective of functional
financial/other interest classification, in a firm that provides professional
2. EVALUATING whether such threat is at an services
acceptable level
➢ A firm of PAs in Public Practice
3. ADDRESSING If not in an acceptable level:
(ESE) a. Eliminating the circumstances RESPONDING TO NOCLAR IN AUDIT OF FS
b. applying Safeguards
c. declining or Ending 1. Becoming aware of the matter
2. Obtaining an understanding of the matter
3. Addressing the matter
➢ the CPA shall: 4. Communicate with respect to groups
o have an inquiring mind 5. Determining whether further action is needed
o exercise professional judgment 6. Determining whether to disclose to appropriate
o use reasonable and informed third-party authority
test 7. Documentation
 RESPONDING TO NOCLAR IN NON-AUDIT ELEMENTS OF ASSURANCE ENGAGEMENT (3SECC)
SERVICES
➢ absence of one will make the engagement Non-
1. Becoming aware of the matter Assurance/Engagement Failure
2. Obtaining an understanding of the matter 1. (3) Three-party contract
3. Addressing the matter with management and TCWG 2. Subject Matter
4. Communicating the matter to the entity’s external 3. Evidence
auditor 4. Criteria
5. Determining whether further action is needed 5. Conclusion (Written Assurance Report)
6. Seeking Advice
PROCEDURES
7. Documentation
(Subject Matter vs. Criteria)
OTHERS EVIDENCE
(gather evidences)
➢ Professional Accountant – CPAs OPINION
➢ Practitioner – CPAs in Public Practice (expression of opinion)
➢ Audit and Review - Auditors

PART 4: INTERNATIONAL INDEPENDENCE THREE-PARTY CONTRACT

STANDARDS
PREPARER CPA USERS
PART 4A: INDEPENDENCE FOR AUDIT AND Responsible Practitioner Intended Users
REVIEW ENGAGEMENTS Party
Responsible to Auditor; Person/s whom
➢ INDEPENDENCE REQUIREMENT subject independent; the practitioner
Period during which independence is required matter/subject may use the prepares the
matter work of experts assurance report
Engagement Period information, or
both
Period covered by the FS

Start of the Start of End of Audit SUBJECT MATTER

period of FS audit work period Report
of FS Date ➢ Subject Matter – nature of the assertion (main
claim)
➢ Subject Matter Information – outcome of the
PART 4B: INDEPENDENCE FOR ASSURANCE evaluation/measurement of the subject matter
ENGAGEMENTS OTHER THAN AUDIT AND
REVIEW ENGAGEMENTS SUFFICIENT APPROPRIATE EVIDENCE

➢ Scope: Assurance engagements may include: ➢ Evidence

1. Key performance indicators o pertains to all information gathered by the
2. Compliance with law or regulation practitioner in evaluating the subject
3. Performance criteria; value for money matter against criteria, on which the
achieved by a public sector body conclusion is based
4. Effectiveness of an entity’s system of internal o the higher the quality, the less evidence
control may be required
5. Entity’s greenhouse gas statement o obtaining more evidence, however, may
6. Audit of specific elements, accounts or items not compensate for its poor quality
of FS o sufficiency and appropriateness of audit
evidence are interrelated
FUNDAMENTALS OF ASSURANCE SERVICES ➢ Consideration when planning and performing the
DEFINITION engagement:
o Quantity (sufficiency) and Quality
➢ Assurance Engagement (or services) (appropriateness) – higher quality, lower
o expression of opinion to increase quality of quantity; exercise professional judgment
information and lend credibility of and professional skepticism
information to intended users o Materiality – low materiality, increase
o should be provided by an independent procedures, increase evidence
professional o Assurance engagement risk – risk of
o three-party contract expressing an inappropriate conclusion
o includes audit, review and examination of when subject matter information is
prospective financial information materially misstated; lower AER, higher
➢ Assurance procedures
o auditor’s satisfaction as to the reliability of o Cost-benefit Consideration – benefit > cost
an assertion being made by one party for consider alternative procedures; if no
use by another party alternatives, gather evidence regardless
o if not attained, Engagement Failure of cost
o Professional Skepticism – critical
assessment with a questioning mind
 SUITABLE CRITERIA LEVELS AND TYPES OF ASSURANCE

➢ Benchmarks/basis used to evaluate or measure ➢ Types of Assurance Engagement

the subject matter o as to Level of Assurance provided:
o Formal – written/authorized by standard
Types Levels Forms Examples
setting bodies (ex: PFRS)
Reasonable Reasonable Positive Audit
o Less formal – internally developed;
Limited Moderate Negative Review
promulgated by limited number of people
o Established – embodied in laws,
regulations, standards; general; o as to Structure:
authoritative (ex: IFRS)
o Specifically developed – designed for a Types Definition
specific entity (ex: Internal Control Policies Attestation Engagements
Assertion-based Made available to intended users
and Procedures)
In writing
➢ Characteristics of suitable criteria (RUNCR)
Report + Written Assertions
o Relevance – relevant; assist decision- Ex: Audit of FS
making Direct reporting NOT available to the intended users
o Understandability – conclusions that are ONLY written assurance report
clear, comprehensive, not subject to
significantly different interpretations Direct Residual definition
o Neutrality – free from bias Engagements Reporting is made to users
o Completeness – sufficiently complete
o Reliability – reasonably consistent
evaluation/measurement of the subject OTHER STANDARDS
matter ➢ Philippine Framework for Assurance Engagements
WRITTEN ASSURANCE REPORT (CONCLUSION) ➢ Code of Ethics for Professional Accountants in the
Philippines
➢ Written assurance provided by the practitioner
➢ Conclusion/opinion that conveys assurance INTRODUCTION TO AUDITING
obtained about the subject matter information DEFINITION
Types of Opinion ➢ AUDITING – systematic process (series of logical
Unmodified/Unqualified Completely agree; present steps); objectively obtaining and evaluating
fairly, in all material respect evidence about assertions (independence = value of
Qualified Except for work); ascertains the degree of correspondence
Adverse Completely negate; DO NOT between assertions and established criteria;
present fairly, in all material communication of the results to interested users
respect
Disclaimer of Opinion NO opinion TYPES OF AUDIT
➢ Qualified/Adverse – w/misstatement, w/SAE
➢ Qualified/Disclaimer – w/misstatement, w/o SAE ➢ NATURE OF ASSERTION/DATA
o FS – opinion on the FS
ASSURANCE ENGAGEMENT o Operational – management/performance
audit; effectiveness/efficiency of
ASSURANCE ENGAGEMENT RISK
operations
➢ Risk of expressing an inappropriate conclusion o Compliance – entity’s compliance/degree
when subject matter information is materially of compliance on
misstated standards/laws/regulations
➢ Risk of Material Misstatement (MM) – dependent on ➢ TYPES OF AUDITOR
the subject matter information environment o External – independent; CPAs in Public
o Inherent Risk – assumed that Practice; commonly performs FS audit
misstatement already exists; no related (can also perform
control Operational/Compliance audit)
o Control Risk – possibility that o Internal – normally part of the
misstatement will not be prevented, organization; commonly performs
detected and corrected Operational audit (can also perform
➢ Risk of Non-Detection – dependent on the Compliance/FS audit but for internal use
effectiveness of auditor’s procedure; only)
effectiveness > efficiency o Government – COA; audit GOCCs/
o Detection Risk – practitioner will not Government controlled operations;
detect a material misstatement that exists commonly performs Compliance audit
➢ ↓AER, ↑procedures; (can also perform Operational/FS Audit)
➢ ↓Acceptable level of Audit risk, ↑evidence must be
obtained
ESTABLISHING INDEPENDENCE OF INTERNAL ASSURANCE PROVIDED
AUDITORS
➢ HIGH but not absolute
➢ BASIC ORGANIZATIONAL STRUCTURE
CAUSES OF MISSTATEMENTS
SHAREHOLDERS ➢ Fraud – intentional
➢ Error – unintentional

BOD (TCWG) REASONABLE ASSURANCE AND THE INHERENT

LIMITATIONS OF AN AUDIT
AUDIT ➢ Use Selective Testing – only a portion; sampling;
COMMITTEE sampling risk
➢ Inherent Limitations of Internal Control (CHuCO) -
EXTERNAL INTERNAL
control risk
AUDITORS AUDITORS
o Cost constraint
o Human limitation
MANAGEMENT o Collusion – two/more parties conspire to
deceive and manipulate financial records
OPERATING o Override – intervention of management to
DEPARTMENTS manipulate accounting records and
prepare fraudulent FS by overriding
➢ HOW TO MAINTAIN? controls
o Independence – internal auditors should ➢ Audit evidence is persuasive; there is always room
not have reportorial duties on the for doubt
operations/operations department ➢ Auditor’s opinion is permeated by judgment;
possibility of mistakes
FINANCIAL STATEMENT AUDIT
➢ Nature/characteristics of assertions; exposure to
OBJECTIVE OF FS AUDIT inherent risk
➢ PSA 120 – audit of FS is to enable the auditor to DEMAND FOR FS AUDIT
express an opinion on whether the FS are prepared
➢ AUDIT RISK – when an auditor expresses an
in all material respects, in accordance with GAAP
inappropriate conclusion when the FS is materially
or other identified financial reporting framework
misstated
➢ PSA 200 – to obtain reasonable assurance; to
➢ RISK OF MATERIAL MISSTATEMENT
report on the FS
o Inherent Risk – susceptibility of the FS to a
➢ Expression of an opinion; FS are taken as a whole;
MM, assuming that there is no related
reasonable assurance; in all material respects;
control
presence of criteria; communication of the results
o Control Risk – risk that a MM that could
ELEMENTS OF FS AUDIT occur will not be prevented, detected and
corrected, on a timely basis by related
1. THREE-PARTY RELATIONSHIP
internal controls
➢ PREPARERS OF FS – management
➢ RISK OF NON-DETECTION
➢ AUDITOR
o Detection Risk – risk that the auditor will
o Performs audit procedures (in
not detect a MM that exists
accordance with IFRS)
➢ BUSINESS RISK – anything that hinders an entity’s
o Gathers audit evidence
achievement of its objectives
o Auditor expresses an opinion
➢ INFORMATION RISK – information might contain
➢ USERS OF FS
misstatements; ↑information risk ↓reliability
o Receives the Audited FS (FS + Audit
report) VALUE OF FS AUDIT
2. APPROPRIATE SUBJECT MATTERS
➢ ↑information risk ↓cost of capital
➢ Audit Reliability
➢ Use to deter inefficiency and fraud
➢ Adequate supporting records and
documents should be available GENERAL PRINCIPLES OF AUDIT (CPP PJ SAE)
3. SUITABLE CRITERIA
➢ IFRS/PFRS 1. Code of Ethics
➢ Applicable Financial Reporting 2. Philippine Standards on Auditing
Framework/GAAP 3. Professional Skepticism
4. SUFFICIENT APPROPRIATE EVIDENCE (SAE) 4. Professional Judgment
5. WRITTEN AUDIT/ASSURANCE REPORT 5. Sufficient Appropriate Audit Evidence
➢ Conclusion
➢ Form appropriate to a reasonable
assurance engagement
 THEORETICAL FRAMEWORK OF FS AUDIT (VIC 3. INQUIRY – seeking information from knowledgeable
BIG T) persons; PSA=internal
4. CONFIRMATION – specific type of inquiry; obtaining
1. Verifiable
a representation of information/existing condition
2. Independence
directly from a third party; source=external
3. Conflict
5. RECALCULATION – checking the mathematical
a. Application of Accounting Policies
accuracy of documents/records
b. Performance of Auditing Procedures
6. REPERFORMANCE – auditor’s independent
4. Benefits the public
execution of procedures/controls that were
5. Effective Internal Control System
originally performed as part of the entity’s internal
6. GAAP
control
7. True in the past, continue to hold true in the future
7. ANALYTICAL PROCEDURES – evaluations of
AUDIT PROCESS financial information; investigation of identified
fluctuations and relationships

Entity prepares and The auditor performs GATHERING OF EVIDENCE

presents FS audit procedures ➢ Sampling – least effective
➢ Specific/Selective Testing – more effective
➢ 100% Examination – most effective
➢ RAP – inspection, observation, inquiry, analytical
The auditor procedures
The auditor gathers ➢ ToC - inspection, observation, inquiry,
expresses an audit
auidt evidence reperformance
opinion
➢ ST – all specific audit procedures EXCEPT
REPERFORMANCE
➢ FS are considered assertions/representations
➢ Implicit assumptions: AUDIT PROCESS: A MORE DETAILED APPROACH
o Going Assumption
o Adequate Disclosure Study and
Preliminary
➢ Assertions/Representation Evaluation of
Engagement Audit Planning
Internal
o Transactions and Events and Related Activities
Control
Disclosures
o Account Balances and Related Disclosures
Evidence
Transactions and Events Account Balances gathering Completing the Issuance of the
(Substantive Audit Audit Report
(T-POCCAC) (A-PACER-C)
Procedures)
Presentation Presentation
Occurrence Accuracy, Valuation,
Completeness Allocation Post Audit
Cut-off Completeness Responsibilitie
Accuracy Existence s
Classification Rights and Obligations
Classification
AUDIT PLANNING

➢ Risk Assessment Phase

MAJOR AUDIT PROCEDURES

1. Risk Assessment Procedures (RAP) – assess risks FAP (Further Audit

related to audit; get to know the entity Procedures)
RAP
2. Test of Controls (ToC) – evaluate operating • ToC
effectiveness of controls • ST
3. Substantive Test (ST) – detect MM
a. Test of Details – more effective
i. Test of Balances ➢ Internal Control
ii. Test of Transactions o Obtain an Understanding – Audit Planning
b. Analytical Procedures o ToC (FAP) – to minimize ST
o Ultimate goal of IC = assessment of Control
Risk
SPECIFIC AUDIT PROCEDURES (SAP) ➢ RAP vs ToC vs ST
o ToC can be eliminated
1. INSPECTION
a. Inspection of Records/Documents –
examining records/documents in paper
form/electric form/other media
b. Inspection of Tangible Assets – physical
examination of the assets
2. OBSERVATION – looking at a process/procedure
being performed by others