Essay on Audit and Assurnace 5th Edition Solutions

11592 Words Feb 16th, 2013 47 Pages
CHAPTER 4 Engagement Planning LEARNING OBJECTIVES | Review Checkpoints | Exercises, Problems and Simulations | 1. List and describe the activities auditors undertake before beginning an engagement. | 1, 2, 3, 4 | 53, 54, 55, 62, 66 | 2. Identify the procedures and sources of information auditors can use to obtain knowledge of a client’s business and industry. | 5, 6, 7, 8, 9 | 52, 56, 59, 65 | 3. Perform analytical procedures to identify potential problems. | 10, 11, 12, 13, 14, 15 | 47, 48, 49, 51, 58, 63, 64 | 4. List and discuss matters of planning auditors should consider for clients who use computers and describe how a computer can be used as an audit tool. | …show more content…
4.7 The problem with evidence obtained from related parties is that the source is potentially biased, and the information may be selfserving and misleading. 4.8 Benefits of preliminary assessment of materiality: Fine-tune the audit for effectiveness and efficiency. Help auditors avoid surprises related to: Finding out too late about not auditing enough. Finding out later about auditing too much. 4.9 Prior to using internal auditors, external auditors should consider internal auditors' objectivity and competence. 4.10 Five types of general analytical review procedures: 1. Compare financial information with prior period(s). 2. Compare financial information with budgets or forecasts. 3. Study predictable financial information patterns based on the entity's experience. 4. Compare financial information to industry statistics. 5. Study financial information relationships to nonfinancial information. 4.11 The purpose of performing preliminary analytical procedures in the audit planning stage is to direct attention to potential problem areas so the audit work can be planned to reduce the risk of missing something important.

4.12 The steps auditors can use to apply comparison and ratio analysis to unaudited financial statements are: (1) develop an expectation, (2) define a significant difference, (3) calculate

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