Module 1 ASSURANCE SERVICES FRAMEWORK

P.13 Audit Specific type of assurance engagement on historical financial info (subset of assurance)
Assurance —audit (Reasonable) ISAs 100-199
—Review (Limited) ISREs 2000-2699
—other assurance engagements (Reasonable or limited) e.g. IC, GHG report ISAEs 3000-3699
P.14 Financial statement audit process Figure 1.1

P.17 The internationalisation of auditing IFAC, IAASA, IAR, IESBA(Code) Figure 1.2 P.19
P.20 Regulation of auditing in Australia FRC, ASIC, APESB, AUASB
3-tiered reporting framework 1st: <250,000, Sole trader, government, no annual report audit, no financial report
2nd: $250,000 - $1m or review/review and financial report
3rd: Prepared audited financial report

P.23 Regulation of auditing in New Zealand XRB, NZASB, NZAUASB

P.24 International framework By IAASB, not standard or required, help understanding

P.24 Code of Ethic Fundamental principles: • integrity (straight forward & honest)
• objectivity (bias, conflict of interest)
• professional competence and due care (knowledge & skill)
• confidentiality
• professional behaviour (comply with law)

Threat: • Self-interest
• Self-review
• Advocacy (Promote)
• Familiarity
•Intimidation
Safeguard

P.27 The Code—professional accountants in public practice (Part C)

P.34 Quality Control

P.39 Audit quality framework Input, process, output

P.43 Reasonable and limited assurance Audit & review, evidence, reporting

P.45 Attestation and direct engagements Attestation: by management, audit review

Direct: auditor prepare report

P.46 Elements of an assurance engagement a) three-party relationship involving Figure 1.4, 1.5
– practitioner (auditor)
– responsible party (Board of directors)
– intended users
P.50 (b) an appropriate underlying subject matter (statement or report)

P.52 (c) criteria (rules governing, standard of subject matter)

Characteristic: Relevance, Completeness, Reliability, Neutrality Understandability)

(d) sufficient appropriate evidence (providing the basis for the assurance report)
P.53 Professional scepticism Professional scepticism: – sufficient (qtd) and appropriate (qulity) evidence
(Attitude: Open mind assessment)

P.53 professional judgment Professional judgment: – materiality P.57

(Basic: knowledge&experience) – engagement risk (Inherent, Control, Detection)
– the nature, timing and extent of procedures.
(type) (quantity of information)

(e) a written assurance report (Framework, para. 26) 2 Conclusion form

 Reasonable: ‘In our opinion the internal control system is effective'
Limited: "Nothing come to our attention to believe internal control is not effective"
Module 2 GENERAL AUDIT PRINCIPLES AND AUDITOR RESPONSIBILITIES

P.97 Auditing standards

Application of International Standards IAASB → ISA(financial statement), AUASB→ASA(financial report)

P.98 Smaller Entity (ISA)

P.100 Public Sector perspective

Auditor-General
P.101 Mandate of the Audit General

P.103 Overall objectives of independent auditor • sets out the overall objectives of the independent auditor
P.104 Inherent limitations • explains the nature and scope of an audit
• explains the scope, authority and structure of ISAs (ISA 200, para. 1).

P.105 Risk Audit risk: inherent risk & control risk + Detection risk
The risk of material misstatement at the assertion level consists of inherent risk and control risk
Detection risk is risk that auditor will not detect material misstatement exists in an assertion

P.111 Professional scepticism • Questioning mind—a disposition to enquiry, with some sense of doubt.
• Suspension of judgment—withholding judgment until appropriate evidence is obtained.
• Search for knowledge—a desire to investigate beyond the obvious, with desire to corroborate
• Interpersonal understanding—recognition that people’s motivations and perceptions
• Autonomy—the self-direction, moral independence and conviction to decide for oneself,
• Self-esteem—the self-confidence to resist persuasion and to challenge assumptions

P.115 Terms of audit engagements

P.120 Independence for the audit Conflict of interest

P.124 Auditor and auditor firm rotation Auditor:5 yrs with 2 yrs cooling down, Firm: 10 year Table 2.2

P.126 Quality control for audits Comply with standard and legal (review stage)

P.129 Engagement performance —Direction, —Supervision, —Consultation

P.130 Review of audit working papers detailed review → higher-level review

P.131 Engagement quality control review

P.133 Audit documentation • nature, timing and extent of audit procedures performed
• results of audit procedures and audit evidence obtained
• significant matters identified and conclusions reached thereon

P.135 Fraud in an audit Error (FS, unintented)

Fraud (Assertion, intented)
P.137 Fraudulent financial reporting
P.137 Misappropriation of assets (theft)
P.138 Discussion among the engagement team
P.139 Risk assessment procedures

P.141 Nature of fraud and fraud indicators • incentive or pressure

• perceived opportunity
• rationalize (attitude)

P.148 Continue the engagement After voting at shareholder annual general meeting

P.150 Laws and regulations in an audit Absence of identified NOCLAR → no further audit procedures (direct & indirect)

P.152 Going Concern

P.154 Communication of audit matters with those charged with governance

P.156 Communicating deficiencies in internal control to those charged with governance and management
Module 3: Understanding the entity, assessing risk and responding to risks

P.183 Planning an audit - Reason (Purpose)

- Nature & extent (Factor)
Iterative base Effective internal control (weak ← less TOC, more SAP)
P.184 Planning Activities
Overall Audit Strategies Set scope, timing and direction on audit
(nature) (extent)
P.185 Description of audit plan
P.188 Materiality Highest level of misstatement tolerated * not fixed
Rule-of-thumb approach % of benchmark e.g. Profit b4 tax 5-10%, Revenue, 0.5-1%, NAV 0.5-1%
(depends on relevant, stability, Predictability)
P.190 Materiality application
P.191 Performance Materiality
P.192 Assertion of Financial statement Revenue and Expenses Assets, liabilities
Classes of transactions and events Account balances
& related disclosures for the period under audit & related disclosures at the period end
1 Occurrence 1 Existence
2 Completeness 2 Completeness
3 Accuracy 3 Accuracy, valuation & allocate
4 Classification 4 Classification
5 Presentation 5 Presentation
6 Cutoff 6 Rights and obligations

P.197 Risk of material misstatement Error (FS) & Fraud (Assertion)

P.197 Perform risk assessment procedures • Enquiries of management and others within the entity.
• Analytical procedures
• Observation and inspection.
P.199 Going concern
Susceptibility Professional judgment and professional skepticism
P.203 Internal Control Understand the entity and environment
1. control environment
2. the entity’s risk assessment process
3. information system
4. control activities
5. monitoring of controls
P.206 Internal controls in small businesses Weak segregation of duty and internal control ← SAP

P.210 IT Environment Control General controls P.211 P.216-219 Application controls

Organisational and management controls Input controls
Systems development & program maintenance controls Processing controls
Computer operation controls Output controls
System software controls
Data entry and program controls

P.225 Strategic analysis Understanding the client’s business model

• Expectations
• Going concern
• Audit risks
• Control environment

Techniques used in strategic analysis • SWOT analysis P.230

• PEST analysis - External Envir P.232
• value chain analysis. P.234

Analytical procedure Simple comparisons P.237

 Reasonableness tests P.239
Ratio analysis P.240
• profitability ratio
• activity ratio
• liquidity ratio
• financing ratio
• profitability Return on shareholders’ equity = Net profit after tax/ Ordinary shareholders’ equity
Return on total assets = Operating profit before tax/ Total assets
Net profit = Operating profit before tax/ Sales
Gross profit (Gross margin) = Gross profit/ Sales
Operating expenses = Each individual item of expense/ Sales

• Activity Asset turnover = Sales/ Total Assets

Inventory turnover = Cost of goods sold/ Average inventory
Days in inventory = Average inventory × 365/ Cost of goods sold
Debtors turnover = Credit sales/ Average debtors
Days in debtors = Average debtors × 365/ Credit sales
Days in payables = Average accounts payable × 365/ Credit purchases

• liquidity Current ratio = Current assets/Current liabilities

Quick asset ratio = Cash + Marketable securities + Accounts receivable/ Current liabilities

• financing Debt–Equity ratio = Total liabilities/ Shareholders’ equity

= Long-term liabilities/ Shareholder's equity
Debt–Assets ratio = Total liabilities/ Total assets
Number of times interest earned = EBIT/ Interest expense

P.249 Responding to assessed risks Type Inspection, observation, inquiry, confirmation, recalculation, reperformance
Factor • the judgment of the auditor after considering materiality
• the assessed risk
• the degree of assurance the auditor plans to obtain.

P.250 Tests of controls Purpose - Analytical procedures

Substantive procedures - Tests of details

P. 254 Evaluation of misstatements identified identified misstatements and uncorrected misstatements

Clearly trivial
Module 4 THE AUDITOR’S RESPONSE TO ASSESSED RISKS

P.279 Sufficient appropriate audit evidence (sufficient - quality, appropriate - relevant & reliability)

P.280 Audit procedures to reduce this risk to an acceptable low level.

P.281 Tests of controls (TOC)
P.294 Substantive procedures (SAP)

P.281 (TOC)
P.285 Computer-aided techniques
P.286 Test data (TOC) assess independently existence, effectiveness and continuity of program controls.
—Simulated transactions
—Exception report
P.288 Integrated test facilities dummy entity

P.289 Difference between test data and integrated test facility techniques

P.291 Other techniques for testing IT controls Processing approaches

Non-processing approaches
P.293-294 Sampling techniques for testing controls
Random selection
Systematic selection
Haphazard selection.

Evaluation of tests of control sample results Sample deviation rate higher → to look for other controls
→ Increase the level of substantive testing

P.294 Substantive procedures (SAP)

P.296 Reasonableness Test
P.300 Tests of details

P.307-308 Audit software for substantive testing • generalised audit software (applicable to a wide variety of audit situations)
• purpose-written programs (customised to suit a particular audit situation)
• utility programs and system management programs.

P.312 Sampling techniques in substantive procedures The sampling interval = $3,150,000 / 30(sample size) = 105 000 monetary units.
Monetary unit sampling (MUS) Every 105 000th monetary unit will be sampled.

P.313 Evaluation of substantive sample results 1. analyse the deviations detected

2. project the errors found in the sample to the population
3. assess the risks of an incorrect conclusion

P.315 Going concern issues - Audit procedures (Planning stage)

management make assessment & auditor review management’s plans
P.316 Mitigating circumstances (減輕負擔) Obtain written representation to plans, eg. written confirmation from 3rd parties

P.317 Financial support - Confirmation and evaluation Letter of support

Letter of subordination

P.318 Audit procedures for accounting estimates allowance for doubtful debts ← professional scepticism

P.319 Audit procedures for fraud

p.320 Audit procedures for related parties

P.323 Advanced audit data analytic techniques (Planning stage)

Analyse complete data sets (Big Data)

P.324 Other auditors and experts

P.324 Component auditors
P.325 Internal auditors
P.326 Auditor’s expert
P.327 Management’s experts
Module 4 THE AUDITOR’S RESPONSE TO ASSESSED RISKS

P.328 E-commerce environmen - Evidence-gathering

P.328 Business-to-business TOC

Business-to-consumer. TOC
P.329 Substantive testing in an e-commerce environment

P.332-334 Subsequent events Adjusting & Non-Adjusting Event

Completion (Completion stage)

P.336 Management representation letters
P.336 Solicitors’ representation letters direct communication with the entity’s external legal counsel.
P.337 Technical review
P.337 Engagement quality control review by an experienced audit partner
P.337 Audit completion checklist
P.337 Audit completion checklist before the audit file can be signed off by the audit partner
Module 5: Audit conclusions and reporting requirements **ending on or after 15 December 2016 are examined.
Final stage of the process: the conclusions the auditor draws and the preparation and issuing of the auditor’s report.

P.360 Reports associated with reasonable assurance engagements

P.360 Reporting responsibilities for audits of financial statements Primary group: Reporting to shareholder
P.362 Reporting to a regulatory body
P.363 Reporting to those charged with governance and management Communications with the audit committee
P.364 Management letter

P.365 Types of auditor’s report 1. Standard (unmodified) auditor report

2. Modification to the auditor's opinion - qualified, disclaimer,adverse
3. Modification to te auditor report other than opinion (X affect opinion)
- Material uncertainty releted to going concern
- Emphasis of matter
- Other matter
P.366 Standard (unmodified) auditor report
P.368 Independence declaration
P.371 Key audit matter (No.<3) Those matters in the auditor’s professional judgment, were of most significance
in the audit of the [current period’s] financial statements
**modifies their opinion X included in KAMs
P.373 Modifications to the standard auditor’s opinion —qualified uncorrected misstatement are material, not pervasive
—disclaimer unable to obtain evidence, material & pervasive
Doubt to integrity of mgn written representation
—adverse FS can't relied opon, material & pervasive

P.382 Matters that do not affect the auditor’s opinion —Emphasis of Matter paragraph (not materially misstate)
Uncertainty relate to the future outcome of exceptional litigation
Significant subsequent event that occurs
early application (where permitted) of a new accounting standard
Major catastrophe
—Other Matter paragraph (not presented or disclosed in the financial statement)

P.385 Auditor reporting for going concern and fraud —Unmodified opinion and include a separate section, material uncertainty
Heading: Material Uncertainty Related to Going Concern
—Qualified opinion or adverse opinion, no disclosure of material uncertainty

P.388 Fraud and appropriate communication by the auditor if unable to continue the engagement

P.388 Materiality and pervasiveness

P.391 Comparative information Audit implications Amounts and disclosures in the FS in respect of one or more prior periods
• corresponding figures
• comparative financial statements (Other Matter paragraph)

P.393 The auditor’s responsibilities relating to other information in the annual report X Outside the scope of this ISA
• management report, management commentary • separate industry reports
• chairman’s statement • CSR reports
• corporate governance statement • sustainability reports
 • internal control and risk assessment reports • diversity and equal opptunity

P.395 Fair presentation and compliance frameworks true and fair view

P. 396 Special areas Audit (special purpose frameworks) meet the financial needs of specific users
• a tax basis of accounting for a set of FS that accompany an entity’s tax return
• the cash receipts and disbursements basis of accounting for cash flow information
• the financial reporting provisions
• the financial reporting provisions of a contract, loan
P.398 Audits of summary financial statements
P.399 Auditor’s reporting on concise簡潔 financial reports
P.401 Reports issued by external auditor in public sector Auditor-General’s reports
P.402 Reports providing limited assurance interim and other financial information or assurance provider is not the auditor
P.406 Reports providing no assurance Compilation report, Agreed-upon procedures, Comfort letter engagements
Module 6 PERFORMANCE ENGAGEMENTS

Performance engagement An audit/review to access thr economy, efficiency and effectiveness of activities
• operational auditing (gov agent/program)
• value-for-money auditing
• comprehensive auditing
• compliance auditing
• program auditing.
P.435 Independence and quality controls

P.438 Elements of the engagement Table 6.1 compare element with FS

P.439 Differences between performance audit & FS audit 1. Project and topic selection
2. Measurer/evaluator - direct engagement
3. Subject matter information - variety report
4. Criteria - guideline, framework, standard
5. Reporting - enable public sector auditor express conclusion/opinion

P.441 Better practice guides (BPGs)

P.442 Economy, Efficiency and Effectiveness Definitions Economy minimise cost of resource (input)

Efficiency deliver & ojective achieve (process)

Effectiveness Outputin quality, quantity and time (outcome and output)

Performance audit process

P.447 Project 1. Select the organisation, program or activity for audit. - Significant
P.448 identify 2. Identify potential audit topics based on significance, risk to good management and potential benefits. - Judgement, 3E
P.452 3. Gain an understanding of the organisation, program or activity subject to audit.
P.452 4. Undertake preliminary study by identify issues, key mgnt systems, develop audit objectives, general criteria
P.453 5. Prepare preliminary study report.
P.454 6. Discuss the preliminary study report contents with management of the organisation subject to audit.
P.455 7. Develop detailed audit criteria. Example 6.3 suitable ctiteria
P.455 8. Develop the audit plan including the audit program. - always change, one-off audit
- Performance information and indicators P.461
- Input, output, outcome P.464
Planning
stage - Attributes of meaningful performance indicators P.465
• relevant— relate to the needs of those people using them to make decisions
• quantifiable— objectives have been achieved in absolute or proportional measures
 Planning
stage

• verifiable— an independent assessment should result in similar conclusions

• free from bias— information has been impartially gathered
• appropriate— suitable for the users’ purposes
• a fair presentation represent what they purport to represent
• balanced— provide a complete picture of what is being done,
• cost-effective— balance the benefits & costs
P.469 9. Carry out audit procedures as defined in the audit program. - obtain evidence to achieve audit objective
• Inputs/outputs review
Audit • Systems-based review
conduct • Comparisons
stage • Effectiveness evaluation
P.480 10. Analyse evidence, evaluate findings so as to develop conclusions and recommendations.
P.481 11. Communicate summary of draft findings and proposed recommendations to head of organisation and minister.
P.484 Report 12. Report to the head of the organisation, the minister and parliament. - exit review
P.484 Follow 13. Follow up and report on conclusions and recommendations.

Module 7 OTHER ASSURANCE SERVICES ( other than audits or reviews of historical financial information )
** 1 assurance of prospective financial information
2 assurance of non-financial information (Sustainable& IR)
3 assurance on systems and processes (internal control)
4 assurance on behaviour (compliance with regulation)

P.501 Nature of assurance engagements

P.501-502 Framework for assurance engagements
• The three-party relationship
• Subject matter information (data, reports on systems and processes, corporate governance, compliance with regulations)
e.g. performance indicators=data, internal control=system, human-policy&CG= behavior)
• Criteria (standards, rules or benchmarks)
• Evidence collection
• A written assurance report
P.503 Elements of assurance engagements General requirements relating to the engagement
Planning
Evidence gathering
Reporting and other communication responsibilities
P.505 Independence & professional reputation(quality controls)
P.507 Recent trends in other assurance services • other financial reporting
• sustainability reporting
• internal controls
• non-financial information
• compliance engagements
P.508 Prospective financial information Assurance Forecast:reasonable expectations,Projection:hypothetical events may not expected
P.510 Compilation of pro forma financial information included in a prospectus (adjusted past financial statements.)
P.512 Non-financial information Assurance
P.514 Environmental and sustainability assurance (GRI sustainability report)
P.517 Assurance on carbon emission disclosures
P.516 Small and medium-sized enterprise sustainability reports Differentiate themselves from competitors
Provide credible way present sustainability performance to stakeholder
A greater range of finances demonstrate sustainability
P.519 Assurance on water accounting report
P.519 Business performance measurement [ assessing the reliability of information being reported from
[ assessing the relevance of the performance measures
P.520 Criteria for performance measurement assurance • relevant clearly defined objectives
• quantifiable objectives achieved in absolute and proportional measures
• verifiable result in similar conclusion in independent assessment
• free from bias report information impartially
• balanced provide a complete picture
• cost-effective balance the benefits
• time-based and timecover a defined time period
P.524 Assurance on systems and processes Principle
P.527 Assurance on internal control (COSO framework) 1. control environment 5 Question 7.6 Example
 2. risk assessment 4 P.528
3. control activities 3
4. information and communicati 3
5. monitoring activities. 2
17
P.530 Risk management, control & governance processes (AS/NZS ISO 31000 Risk Management—Principles and Guidance)
• Establish the context • Treat risk
• Identify risks • Monitor and review
• Analyse risk • Record
• Evaluate risk
P.531 Assurance on behaviour
Compliance engagements 1. attestation engagements Table 7.2
2. direct engagements P.533
P.535 Corporate governance assurance
P.537 Continuous auditing
P.539 Integrated reporting and assurance
P.540 New competencies for assurance practitioners
P.543-550 Internal audit monitoring the adequacy and effectiveness of internal control
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M3, M5, M6
P.100 Auditor-General. Purpose: Government departments and agencies conduct their affairs effectively, and with efficiency and economy.
—Public sector auditor. provide assurance regarding the agency’s policy implementation.
1. The executive should have no income that is not granted to it or otherwise sanctioned by parliament
2. The executive should have no expenditures except those approved by parliament.
• Responsible to the parliament, an independent officer of the parliament.
• Responsible to government departments, statutory authorities and instrumentalities
• Responsible under the Auditor-General Act 1997 (Cwlth) for providing auditing services to parliament and public sector entities.

The public sector auditor is usually established by legislation created in each jurisdiction.
legislation in a jurisdiction will require compliance but if not, auditors-general have the power to choose what standards they will apply.

**not subject to control or direction by either parliament or the government.

X considers the appropriateness of the policy itself.
Cannot impose the recommendations made in their performance audit reports on an agency.
(matter for the agency to determine whether to implement the recommendations. )

Performance audits & Auditor-General

—Auditors work for Australian National Audit Office (ANAO) or state audit offices
—performance audits result in a separate report to parliament following the completion of each audit.
Reviewing whether taxpayers’ money is spent efficiently, effectively, economically and in accordance with law.
These audits may review all or part of an agency’s operations
Results of these audits are reported to the chief executive officer of agency concerned, minister, Treasurer and parliament.

—financial statements audit Provide an independent opinion on NSW Government agencies’ financial statements.
Report on each financial audit is provided to the minister responsible for the agency(Treasurer)
and to parliament through the Auditor-General’s Reports to Parliament.

The International Organisation of Supreme Audit Institutions (INTOSAI) operates as an umbrella organisation for the external government audit community.
vu Auditor-General’s reports: report to parliament is usually provided to every member of parliament
• a commentary on the operations and financial results of public sector entities
• details of audit opinion reports issued during the period
• other matters of concern and interest at the Auditor-General’s discretion.
IAASB standards globally and the Australian standards locally the most important sources of guidance for performance auditors.

Audit agents Purpose: Responsible to parliament for the efficient, effective and economical use of resources in carrying out its responsibilities

P.101 Parliament Purpose: Allocates responsibility to the agency.

The control of public expenditure is one of the main responsibilities of government.
responsible for authorising annual expenditures.
Parliament approves a budget. This budgetary and appropriation system is central to financial control.

Treasurer The minister responsible for financial and economic matters. is supported by the Department of Finance

Public accounts committees Examine the accounts of the receipts and expenditures and the Auditor-General’s report
M3
P.250 Tests of controls —testing the operating effectiveness of controls in preventing, or detecting and correcting, material misstatement
—aimed at control risk, assess the control risk or the risk of material misstatement occurring

Substantive procedures —including testing details of transactions, account balances and disclosures, and analytical procedures.
—aimed at detecting material misstatement (at the assertion level)
M4
P.280 Audit procedures: to reduce this risk to an acceptable level.
→ Obtain sufficient and appropriate audit evidence to be able to draw reasonable conclusions on which to base an opinion.

P.281 Tests of controls (TOC) P.294 Substantive procedures (SP)

Understanding of the control environment and identifies controls that they may be able to rely on. (Planing stage) 1. Substantive analytical procedures (SAP)
Combination of enquiry, inspection and reperformance more assurance than just enquiry and observation —Analytical procedures (Planning stage)
Documentation to sight authorisation, or observing employees signin → test control for evidence Performed as risk assessment procedures
comparison of the entity’s financial information with
objectives: prior,budgeted and similar industry information,
1. to obtain evidence on whether the controls in accordance with the auditor’s understanding and as documented —SAP (completion stage)
2. to confirm whether the controls functioned effectively throughout the period of intended reliance. 2. Tests of details. (TOD)
—tests of transactions and balances designed to
obtain direct evidence
1. SAP
1) Nature of tests 1) Nature of tests
—test operating effectiveness of controls in prevent, detect and correct, material misstatement —Applicable to large volumes of transactions that tend to be predictable over time

2) Nature audit procedures used to obtain assurance about operating effectiveness of controls 2) Nature Refers to the use of substantive analytical procedures or test of details.
Timing when tests are performed or period auditor can place reliance on controls (whole yr) Timing when the evidence is collected, at year end or at an interim date.
Extent how frequently, the length of time, expected rate of deviation, the relevance and reliability Extent Substantive test increases when risk of material misstatement is greater

2) Purpose: Control Risk 2) Purpose: detection risk

2) Sampling technique Random, whether the controls are working, not monetary amounts. 2) Sampling technique high-value or key items or items over a certain amount

3) If control changed since last tested, auditor needs to test operate effectiveness of controls 3) Consideration:
If no change, the auditor test at least every third audit. (in current audit) • the suitability of substantive analytical procedures for testing assertions
• the reliability of the data
• whether a sufficiently precise expectation can be developed
• whether the amount of difference from an expectation is acceptable.

P.328 4) TOC in in e-commerce: business-to-business & business-to-consumer 4) Reasonableness Test

P.300 2. TOD
1) Nature of tests
—obtaining evidence regarding certain assertions about account balances.
2) Tests of transactions and account balances
3) Types of tests of account balances
P.302 1. external confirmations
—Positive confirmation requests (very reliable, High inherent &control risks)
—Negative confirmation requests (Less reliable, Less inherent &control risks)
P.303 2. bank confirmations
P.304 3. attendance at physical inventory counts.
• Vouch from accounting record to source document of stock(existence)
• Tracing from source documents to accounting records (completeness)

4) Computer-aided techniques 4) Audit software

1. test data P.308 1. generalised audit software (applicable to a wide variety of audit situations)
2. integrated test facilities 2. purpose-written programs (customised to suit a particular audit situation)
3. utility programs and system management programs.

5) Sampling technique Monetary unit sampling (MUS)

maximum amount of overstatement of a recorded amount with
measurable levels of risk (confidence) of making a decision error
A MUS sample is inappropriate when the auditor is testing for an understatement