The external audit process for the audit of large entities generally involves two or more recognizable stages. One stage involves understanding the business and risk assessment,...

      

The external audit process for the audit of large entities generally involves two or more recognizable
stages. One stage involves understanding the business and risk assessment, determining the
response to assessed risk, testing of controls and a limited amount of substantive procedures.
This stage is sometimes known as the interim audit. Another stage involves further tests of
controls and substantive procedures and audit finalization procedures. This stage is sometimes
known as the final audit.

Describe and explain the main audit procedures and processes that take place during the interim
and final audit of a large entity.

  

Answers


Wilfred
Main audit procedures and processes: interim and final audit
The interim audit generally involves risk assessment, the testing of internal controls, and
certain analytical and other substantive procedures. Many of these procedures are often
performed concurrently.
Risk assessment involves gathering information about the business, inquiries, analytical
procedures and determining the response to assessed risk. In practice it also involves the
determination of materiality and tolerable error.
Risk assessment also involves evaluating the design of internal controls and determining
whether they have been implemented
Final audit procedures also involve a review of the financial statements as a whole to ensure
that they are internally consistent, and in accordance with the relevant financial reporting
framework and the auditor’s knowledge of the business.
Substantive procedures, which include analytical procedures, are designed to provide
evidence that the figures and disclosures in the financial statements are complete, relevant,
and accurate. Arriving at the final conclusions often involves the performance of further
analytical procedures on the financial statements as a whole.
It is common for auditors to provide management with lists of control weaknesses (both
structural and operational) together with recommendations for improvement both after the
interim and final audits.
Auditors are also required to communicate with those charged with governance. Mention
could also be made of management representations, third party confirmations, the review of
working papers, and a number of other matters.
Wilfykil answered the question on April 12, 2019 at 10:22


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