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CHANGING YOUR AUDIT APPROACH TO COMPLY
WITH THE NEW RISK ASSESSMENT SASs
The Auditing Standards Board issued significant new Statements on Auditing Standards related to the auditor’s assessment of risks of material misstatement in the financial statement audit, and the resulting design and performance of appropriate audit procedures. The direct intent of these new Statements was to effect a substantial change in auditor performance in order to improve audit effectiveness – recognizing that in many cases this will result in an overall increased work effort by the audit team. While the traditional audit risk model has not changed, the auditor’s application of that risk model (especially for small and middle market clients) and the resulting nature of audit procedures performed will change dramatically in most cases. The new Statements related to risk assessment are effective for audits of financial statements for periods beginning on or after December 15, 2006, while earlier application is permitted. In order to implement these new Statements efficiently, you must act now to train your audit professionals. Audit professionals must start now, during the current year audits, to identify and plan for properly altering your existing audit approach and methodologies to comply with these significant new Statements.
MAJOR TOPICS:
- Understanding how the new Statements alter or enhance the traditional audit risk model and current audit practice
- Gaining a more in-depth understanding of the auditee and its environment, including its internal control, to identify the risks of material misstatement
- Assessing the auditee’s control environment, and risk assessment and management process for its financial reporting objectives
- Improving judgments about materiality and evaluating audit evidence
- Performing a more rigorous assessment of risks of material misstatement of the financial statements, including identifying significant risks
- Improving the link between assessed risks and the nature, timing and extent of audit procedures performed in response to these risks
- Understanding the guidance related to relying on audit evidence and information gained in prior audits
- Learning how to effectively and efficiently test controls, as now encouraged
- Evaluating, classifying and communicating misstatements, audit findings and internal control matters identified by the auditor
DESIGNED FOR: All professionals who plan, perform, direct or review audit engagements
LEVEL OF KNOWLEDGE: Intermediate
CPE CREDIT: 8 hours, Auditing
PREREQUISITES: None
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