OVERALL AUDIT PLANAND AUDIT 12 PROGRAM HOW MUCH AND WHAT KIND OF TESTING WILL GET THE JOB DONE? Arens, Loebbecke; Auditing, 8/E @2000 Prentice hall.Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. OVERALL AUDIT PLAN AND AUDIT PROGRAM HOW MUCH AND WHAT KIND OF TESTING WILL GET THE JOB DONE? 12
TYPES OF TESTS Procedures to obtain an understanding ofinternal control Test of controls Substantive tests of transactions Analytical procedures Tests of details of balances Arens, Loebbecke; Auditing, 8/E @2000 Prentice hall.Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. Procedures to obtain an understanding of internal control Test of controls Substantive tests of transactions Analytical procedures Tests of details of balances
Figure 12.1 Types of Tests and the Audit Risk Model AAR IR XCR PDR Audit risk Model P rocedures Sufficient Substantive Tests of to obtain an Tests of Analytical understanding of + controls+ tests of f procedures+ details ofcompetent balances evidence internal control transactions per gaas ypes DPT’s of Audit Tests Arens, Loebbecke; Auditing, 8/E @2000 Prentice hall.Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. Procedures to obtain an understanding of internal control Tests of controls Substantive tests of transactions Analytical procedures Sufficient competent evidence per GAAS Tests of details of balances + + + + = Audit Risk Model Types of Audit Tests AAR IR X CR = PDR Figure 12 - 1 Types of Tests and the Audit Risk Model DPT’s
TABLE 12-2 Relationship between Types of Tests and Evidence Type of Evidence oE9 Type of Test Procedures to obtain an understanding of internal control Tests of controls √√√ Substantive tests of transactions Analytical procedures Tests of details of balances Arens, Loebbecke; Auditing, 8/E @2000 Prentice hall.Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. TABLE 12 - 2 Relationship between Types of Tests and Evidence
TABLE 12 Variations in Evidence mix Procedures to obtain an Understanding Tests Substantive Tests Analytical Tests of Details of Internal Control of Controls of Transactions Procedures of balances Audit l Audit 2 Audit 3 MNM MEE M SMEE Audit 4 E= Extensive amount of testing; M= medium amount of testing; S=small amount of testing; n= no testing Arens, Loebbecke; Auditing, 8/E @2000 Prentice hall.Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. E = Extensive amount of testing; M= medium amount of testing; S = small amount of testing; N = no testing. TABLE 12 - 3 Variations in Evidence Mix