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    A) - Overall Responses To Address The ROMM at F/S Level. These Responses Affect Virtually Every

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    hazeerkeed
    The document discusses the auditor's responses to assessed risks of material misstatement (ROMM) at the financial statement and assertion levels. It explains that the auditor designs further audit procedures (FAP) appropriate to the assessed risks, considering relevant assertions, nature, timing, extent, and documentation. The auditor evaluates controls operating effectiveness through test of controls (TOC) and addresses residual risk through substantive procedures (SP). TOC involves evaluating how controls were applied, consistency, and who applied them. SP nature, timing and extent depend on acceptable detection risk and can include inspection, observation, confirmation, recalculation, analytics, and inquiry.

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    A) - Overall Responses To Address The ROMM at F/S Level. These Responses Affect Virtually Every

    Uploaded by

    hazeerkeed
    47 views2 pages
    The document discusses the auditor's responses to assessed risks of material misstatement (ROMM) at the financial statement and assertion levels. It explains that the auditor designs further audit procedures (FAP) appropriate to the assessed risks, considering relevant assertions, nature, timing, extent, and documentation. The auditor evaluates controls operating effectiveness through test of controls (TOC) and addresses residual risk through substantive procedures (SP). TOC involves evaluating how controls were applied, consistency, and who applied them. SP nature, timing and extent depend on acceptable detection risk and can include inspection, observation, confirmation, recalculation, analytics, and inquiry.

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    Auditor

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    The document discusses the auditor's responses to assessed risks of material misstatement (ROMM) at the financial statement and assertion levels. It explains that the auditor designs further audit procedures (FAP) appropriate to the assessed risks, considering relevant assertions, nature, timing, extent, and documentation. The auditor evaluates controls operating effectiveness through test of controls (TOC) and addresses residual risk through substantive procedures (SP). TOC involves evaluating how controls were applied, consistency, and who applied them. SP nature, timing and extent depend on acceptable detection risk and can include inspection, observation, confirmation, recalculation, analytics, and inquiry.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    47 views2 pages

    A) - Overall Responses To Address The ROMM at F/S Level. These Responses Affect Virtually Every

    Uploaded by

    hazeerkeed
    The document discusses the auditor's responses to assessed risks of material misstatement (ROMM) at the financial statement and assertion levels. It explains that the auditor designs further audit procedures (FAP) appropriate to the assessed risks, considering relevant assertions, nature, timing, extent, and documentation. The auditor evaluates controls operating effectiveness through test of controls (TOC) and addresses residual risk through substantive procedures (SP). TOC involves evaluating how controls were applied, consistency, and who applied them. SP nature, timing and extent depend on acceptable detection risk and can include inspection, observation, confirmation, recalculation, analytics, and inquiry.

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    1. Auditor’s responses according to level of ROMM.

    a). Overall responses to address the ROMM at F/S level. These responses affect virtually every
    F/S area. These may include:

     Maintaining professional skepticism.


     Assigning more experienced staff or those with special skills or experts.
     Providing more supervisions.
     Incorporating additional elements of unpredictability in FAP.
     Making general changes to the nature, timing, or extent of procedures.

    b). Further Audit Procedure (FAP) as responses to the assessed ROMM at assertion level, which
    compromise Test of Control and Substantive Procedures include TOD and SAP.

    2. Explain how the auditor designs Further Audit Procedures (FAP).

    The auditor should design and perform audit procedures that are appropriate in the
    circumstances for the purpose of obtaining sufficient appropriate audit evidence. Audit evidence
    is necessary to support the auditor's opinion and report.

    In designing FAP, the auditor must consider:


     Relevant assertion(s);
     Nature, timing, and extent;
     Significant risks; and
     Documentation.

    Auditor assessed before designing and performing further audit procedures, including
    tests of the operating effective controls where, relevant or necessary, and substantive
    procedures, whose nature, timing, and extent are responsive to the assessed risks of material
    misstatement at the relevant assertion level. Auditor also consider in determining the nature,
    timing, and extent of such further audit procedures.

    3. Explain how the auditor perform Test of Controls (TOC).

    In performing Test of Controls (TOC), the auditor evaluates three aspects of controls:

    a). How the controls were applied.


    b). Consistency of controls application.
    c). By whom or by what means controls where applied.
    The auditor should also determine the nature, timing, and extent of TOC. Depending on
    the results of this test, auditors may choose to rely upon a client's system of controls as part of
    their auditing activities. However, if the test reveals that controls are weak, the auditors will
    enhance their use of substantive testing, which usually increases the cost of an audit.

    5 steps in Performing TOC

    1. Identify Risks of Material Misstatement


    2. Identify Controls that Address Risks of Material Misstatement
    3. Evaluate D&I Effectiveness of Controls
    4. Perform TOC Procedures
    5. Evaluate OE of Controls and Document Results

    4. Explain how the auditor Substantive Procedures (SP).

    In performing Substantive Procedures (SP), the auditor determines the nature timing, and
    extent of SP based on the acceptable level of detection risk (DR).

    Steps in performing Substantive Procedure

    1. Identify Risks of Material Misstatement


    2. Perform Substantive Procedure
    3. Evaluate and Document Results of SP.

    Substantive Procedures include any or a combination of (1) Inspection, (2) Observation,


    (3) External confirmation, (4) Recalculation, (5) Analytical procedures, and (6) Inquiry.

    Substantive procedures are intended to create evidence that an auditor assembles to


    support the assertion that there are no material misstatements in regard to the completeness,
    validity, and accuracy of the financial records of an entity. Thus, substantive procedures are
    performed by an auditor to detect whether there are any material misstatements in accounting
    transactions

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