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Systems Based audit approach
The basis of IAS 400, Risk Assessment and Internal Control.
The term systems audit refers to the typical audit approach to medium and large companies and is based on the assumption that such companies have internal control systems which will hopefully constitute a reliable base for the preparation of the accounts. In other words, the characteristic of a systems audit is an examination of internal control.
We have already established that many small companies cannot achieve satisfactory internal control and it is hence clearly futile for the auditor to seek to rely on controls if they don't exist or are patently unreliable. For such enterprises the auditor has no alternative but to carry out a so called 'substantive audit' involving extensive verification of transactions followed by a detailed examination of the balance sheet (verification of assets and liabilities and review of the financial statements).
The contemporary audit approach to reasonably sophisticated companies is therefore to carry out a system-based audit during the course of the accounting year, followed by a balance sheet audit at the year end - if the systems audit work is successful, i.e. the controls prove reliable, the auditor can use his judgement to reduce the extent of the balance sheet work (in no circumstances will the balance sheet work be eliminated entirely!).
Contingencies and Provisions (i) Receive the client's schedule of provisions and seek and contingencies supporting documentation in the form of legal opinions, correspondence
distinguish between early audits and modern audits
Cost and Authorization - Detailed audit of stock Cost A favor of the auditor this is restricted generally to determining the technique adopted through the organization
what factors of stoc verification
Records kept by AUDITOR of procedures applied, tests performed, the information obtained and pertinent conclusions reached in the course of the AUDIT. (2) Any records developed by
Adjusting Events - Audit Process Adjusting events are those such give evidence of conditions such existed at the balance sheet date as the settlement of a court case than the
In previous times, the Kings used to hear their accountants narrate the accounts verbally. Though, as the complexity of the accounting function grew, require was felt to thoroughly
(i) Overview of the audit process (a) Identify the key steps in this framework/ concept. (b) Briefly explain each of the key steps, in your own words. (ii) Framework of cr
Meaning of the auditing definition a) Orderly and efficient manner: An organization which is run in an orderly and proficient manner is able to satisfy the requirements o
factors that influence auditors judgement on sufficiency of audit evidence
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