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Course Details

Auditing - Creating a Plan for Success (Course Id 1882)

Updated / QAS / Registry
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Author : Colten Christensen, Author
Course Length : Pages: 111 ||| Word Count: 66,388 ||| Review Questions: 30 ||| Final Exam Questions: 50
CPE Credits : 10.0
IRS Credits : 0
Price : $89.95
Passing Score : 70%
Course Type: NASBA QAS - Text - NASBA Registry
Technical Designation: Technical
Primary Subject-Field Of Study:

Auditing - Auditing for Course Id 1882

Description :

The auditor uses these four phases to meet the overall objective of the audit, which is to express an opinion on the fairness with which the financial statements present fairly. Every audit requires planning, which occurs during the first of the four audit phases. Auditing – Creating a Plan for Success is a course that will review the audit planning process. This course will discuss the important of evaluating materiality and risk, which will impact the auditor's planned audit evidence. This course will describe how to develop a preliminary judgment about materiality and consider the most appropriate risks for each engagement. This risk assessment auditing CPE course will review the eight steps involved in creating the audit plan.

Usage Rank : 35926
Release : 2022
Version : 1.0
Prerequisites : None.
Experience Level : Overview
Additional Contents : Complete, no additional material needed.
Additional Links :
Advance Preparation : None.
Delivery Method : QAS Self Study
Intended Participants : Anyone needing Continuing Professional Education (CPE).
Revision Date : 19-Feb-2024
NASBA Course Declaration : Participants must complete the final examination within one year of purchase and with a minimum passing grade of 70% or better to receive CPE credit unless otherwise noted on the Course History page (i.e. California Ethics must score 90% or better). After logging in click on the Course History links on your My Courses page for the Begin date and Expire date for the Final Exam.
Approved Audience :

NASBA QAS - Text - NASBA Registry - 1882

Keywords : Auditing, Creating, Plan, Success, cpe, cpa, online course
Learning Objectives :

Course Learning Objectives

At the end of this course, students will be able to:
  • Identify the purpose of internal controls.
  • Recognize the internal control framework used by most companies based in the United States.
  • Identify the interrelated components for an effective internal control system.
  • Recognize the purpose of identifying audit risk.
  • Recognize the difference between control deficiency, significant deficiency and material weakness.
  • Identify why materiality is important for an audit of financial statements.
  • Make a preliminary judgment about what amounts to consider material.
  • Identify the audit risk model and its components.
  • Recognize the impact of engagement risk on acceptable audit risk.
  • Recognize the relationship of risks to audit evidence.
  • Identify the three types of fraud.
  • Identify the SAS that provides guidance to auditors in assessing the risk of fraud
  • Recognize the three elements identified by the AICPA to prevent, deter, and detect fraud.
  • Recognize who is responsible for identifying and measuring fraud risks and taking steps to mitigate identified risks.
  • Identify the procedures to address the risk of management overriding internal controls that are otherwise operating effectively.
  • Recognize the characteristics of different types of fraud.
Course Contents :

Chapter 1 - Auditing - Creating a Plan for Success

Course Learning Objectives

Audit Planning

Audit Risk

Audit Risk Model

Planned Detection Risk

Inherent Risk

Control Risk

Acceptable Audit Risk

Risks in the Audit Risk Model

Assessing Acceptable Audit Risk

Engagement Risk

Acceptable Audit Risk Factors

Step 1 - Client Acceptance

Investigating Clients

Evaluate Existing Clients

Client Acceptance

Identify the Client’s Reasons for the Audit

Obtaining an Understanding with the Client

Create the Audit Strategy

Engagement Staffing

Outside Specialists

Step 2 - Understand the Client’s Business and Industry

Industry and External Environment

Business Operations and Processes

Visit Client Facilities and View Operations

Related Parties

Management and Governance

Code of Ethics

Meeting Minutes

Client Objectives and Strategies

Measurement and Performance

Step 3 - Assess Client Business Risk

Step 4 - Perform Preliminary Analytical Procedures

Analytical Procedures

Types of Analytical Procedures

Comparing Client Data to Industry Data

Compare Client Data with Similar Prior-Period Data

Compare the Current Year’s Balance with that of the Preceding Year

Compare the Detail of a Total Balance with Similar Detail for the Preceding Year

Compute Ratios and Percent Relationships for Comparison with Previous

Comparing Actual Client Data with Client-Determined Expected Results

Compare Client Data with Auditor Expected Results

Common Financial Ratios

Step 5 - Set materiality and Assess Acceptable Audit Risk

Report title requirements

Audit report address requirement

Introductory paragraph requirements

Scope paragraph requirements

Opinion paragraph requirements

Name of CPA firm requirement

Audit report date requirement

Materiality Defined

Applying Materiality

Materiality Preliminary Judgement

Preliminary Materiality Judgment Factors

Evaluating Materiality

Factors Affecting Materiality

Materiality Guidelines Example

Estimate Misstatement

Audit Risk

Audit Risk Model

Planned Detection Risk

Inherent Risk

Control Risk

Acceptable Audit Risk

Risks in the Audit Risk Model

Assessing Acceptable Audit Risk

Engagement Risk

Acceptable Audit Risk Factors

User Reliance on Financial Statements

Client’s Size

Distribution of Ownership

Nature and Amount of Liabilities

Financial Difficulties After the Audit Report Is Issued

Liquidity Position

Profits or Losses in Previous Years.

Method of Financing Growth

Nature of the Client's Operations

Competence of Management

Evaluating Management Integrity

Audit Risk Decision

Inherent Risk

Inherent Risk Factors

Nature of the Client's Business

Results of Previous Audits

Initial Versus Repeat Engagement

Related Parties

Nonroutine Transactions

Recording Account Balances and Transactions Correctly

Makeup of the Population

Fraudulent Financial Reporting and Misappropriation of Assets

Inherent Risk Decisions

Assessing Inherent Risk

Risk to Evidence Relationship

Audit Risk for Segments

Relating Tolerable Misstatement and Risks to Balance-Related Audit Objectives

Measurement Limitation

Evidence-Planning Worksheet Example

Risk and Materiality to Evidence

Step 5 Summary

Step 6 - Internal Control and Assess Control Risk

Effects of Internal Auditor on Controls

AU 322.9 Competence of the Internal Auditors

AU 322.10 Objectivity of the Internal Auditors

AU 322 .11

Audit Committee

Internal Controls Vary by Organization

Reliability of Financial Reporting

Efficiency of Operations

Compliance with Laws and Regulations

AU Section 110.03

Reasonable Assurance

AU Section 110.02

Auditing Standard No. 5

Inherent Limitations

Internal Control Design

Effectiveness of Internal Controls

Standards for Financial Audits

Reliability of Financial Reporting Controls

Classes of Transactions Controls

Auditor Responsibilities for Testing Internal Control

Internal Control Components

Control Environment

Organizational Ethical Values and Integrity

Commitment to Competence

Obtaining Written Representations

Management Operating Style and Practices

Organizational Structure

Human Resource Policies and Practices

Risk Assessment

Audit Risk

Control Activities

Segregation of duties

Separation of the Custody of Assets from Accounting

Separation of the Authorization of Transactions from the Custody of Related Assets

Separation of Operational Responsibility from Record-Keeping Responsibility

Separation of IT Duties from User Departments

Transaction Authorization

Adequate Documents and Records

Physical Control Over Assets and Records

Independent Checks on Performance

Information and Communication


Understanding and Evaluation of Internal Accounting Controls

Internal Control Questionnaires

Update and Evaluate Auditor's Previous Experience with the Entity

Make Inquiries of Client Staff

Examine Documents and Records

Observe Activities and Daily Operations




Assess Control Risk

Identify Audit Objectives

Identify Existing Controls

Communications to Those Charged With Governance

Management Letters

Test of Controls

Purpose of Tests of Controls

Make inquiries of appropriate client personnel.

Examine documents, records, and reports.

Observe control-related activities.

Reperform client procedures.

Extent of Procedures

Tests of Controls and Procedures to Obtain and Understanding

Decide Planned Detection Risk and Design Substantive Tests

Reporting on Internal Controls

Opinion Based Upon an Audit of the Internal Control System

Section 404 Reporting Requirements

Audit Report on Internal Control Example

Evaluation of Internal Controls

Step 7 - Gather information to Assess Fraud Risks


Fraud Definition

Types of Financial Fraud

Fraudulent Financial Reporting

Misappropriation of Assets

Asset Misappropriation Schemes

Conditions for Fraud

Fraudulent Financial Reporting Risk Factors



Duration of Fraud Schemes


Misappropriation of Assets Risk Factors




Assessing the Risk of Fraud

Professional Skepticism

Questioning Mind

Evaluation of Audit Evidence

Information to Assess Fraud Risks

Communication Among Audit Team

Inquiries of Management

Risk Factors

Analytical Procedures

Other Information

Fraud Assessment Documentation

Type of Organization Susceptible to Financial Fraud

Government Reported Fraud

Size of Organization

Industry of Organization

Oversight to Reduce Fraud Risks

Honesty and Ethics

Setting the Tone at the Top

Creating a Positive Workplace Environment

Hiring and Promoting Appropriate Employees




Evaluating the Risks of Fraud

Mitigating Fraud Risks

Fraud Prevention Programs

Velocity of Fraud

Audit Committee Oversight

Responding to the Risk of Fraud

Change the Audit to Address Fraud Risks

Implementing Audit Procedures to Address Fraud Risks

Procedures to Address Management Override of Controls

Examine Journal Entries and Other Adjustments for Evidence of Possible Misstatements Due to Fraud

Review Accounting Estimates for Biases

Evaluate the Business Rationale for Significant Unusual Transactions

Update Risk Assessment Process

Fraud Risk Areas

Revenue and Accounts Receivable

Fraudulent Financial Reporting Risk for Revenue

Fictitious Revenues

Premature Revenue Recognition

Manipulation of Adjustments to Revenues

Signs of Revenue Fraud

Analytical Procedures

Documentary Discrepancies

Misappropriation of Receipts Involving Revenue

Failure to Record a Sale

Theft of Cash Receipts

Misappropriation of Revenues and Cash Receipts

Inventory Fraud Risks

Inventory Risk of Fraudulent Financial Reporting

Warning Signs of Inventory Fraud

Accounts Payable Fraud Risks

Fraudulent Financial Reporting Risk for Accounts Payable

Misappropriations in the Acquisition and Payment Cycle

Other Areas of Fraud Risk

Fixed Assets

Payroll Expenses

When Fraud is Suspected


Initial Detection of Fraud

Tip Sources

Median Loss and Duration by Detection Method

Reporting Mechanisms

Parties to Whom Whistleblowers Report

Responding Misstatements Resulting from Fraud

Use of Inquiry

Types of Inquiry

Evaluating Inquiry Responses

Listening Techniques

Observing Behavioral Cues

Other Responsibilities When Fraud is Suspected

Audit Software Analysis

Expanded Substantive Testing

Other Audit Implications

Step 8 – Accept Client and Develop the Audit Plan

Addendum - Audit Reports


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