Summary Auditing 288/388: Overall Audit Approach

OVERALL AUDIT APPROACH
• What is audit approach? Background
Plan of action or work method → How to approach the audit to:
1. Audit strategy To evaluate the fair presentation of the
Sufficient




why?
Scope?/Overall timing?/ How? financial statements
audit
evidence As a whole or overall Per Account
2. Audit Approach

Nature Timing Extent
what? Audit procedures to be
Extent
performed Nature Timing

3. Audit Plan
Procedure?




Detail steps of audit 1. Test of Controls (TOC) – Test working of controls
procedures
2. Substantive procedures (SP) – Detailed tests → verify year
end balances and transactions

5

• Reasons for Audit Approach

- Why formulate
o co-ordinate audit
o limit audit risk
o audit evidence on cost-effective way
o determine nature/extent/timing of audit procedures

- Using what?
o knowledge of business, industry & IC
o planning materiality
o risk evaluation

• Overall Audit Approach - ISA 330

AR= IR x CR x DR

RISK BASED AUDIT APPROACH

Risks Identified at Risks Identified at
financial statement level account/assertion level




Determine overall approach Specific audit procedures
applied to respond to
material misstatements of
Nature Timing Extent assertions