Please answer Q1 and Q2. Assignment Before beginning the assignment, take a mome

Question

Please answer Q1 and Q2.

Assignment Before beginning the assignment, take a moment to look through the papers in this module. Note in the lower left-hand corner that some documents are audit work papers created by Garcia and Foster CPAS as they conducted the audit. Note that other papers are client documents that Garcia and Foster collected and kept in support of their audit. Finally, note the numbering system in the lower right-hand comer of each page and how each paper within the audit is numbered and linked back to the audit program In this part of your assignment, you will examine the firm's audit documentation in relation to the auditors performance on several risk assessment procedures. Please complete the following tasks: Qh Research, cite, and summarize (in one or two sentences per standard identified) the auditing tandards as they relate to the auditors' responsibilities in the following areas: Obtaining and documenting an understanding of the client's environment, including intenal controls b. Materiality assessment in planning and performing the audit. c. The audit risk model. d. Preliminary analytical procedures. Evaluate Garcia and Foster's documentation of their understanding of the client's env (workpaper B.2.1.) Describe any problems you find and provide suggestions for imp mprovement. This 3. Revi B. ion relates to Step 2 of the Garcia and Foster Audit Plan. ew Garcia and Foster's calculations of materiality thresholds for the 20X2 Au dit (workpaper 2.1.) Determin procedures. Des e if the auditors correctly applied the materiality concept in their r cribe any proble relates to Step 2 of the Garcia and Foster Audit Plan r aspects of the Audit Risk you find and provide suggestions for improvement, Ide ns you find and provide suggestions for improvement. 04. Evaluate othe the auditors' application you discover with the memo. This question relates to Step model and bkaper B.2.1.) In particular, review rovement. Identify and document any addition of the audit risk model and brainstorming processes 9gestions for imp Describe any problems mee Garcia and Foster Audit Plan. 9pg. 2of5 Case Assignment: Pg. pB

Explanation / Answer

Ansewer to Question No 1

Obatining and documenting the understanding of client environment, including internal controls(SA 230 deals with it)

Audit documentation provided evidence of the auditors basis for audit report and Evidences that the audit was planned and performed in accordance with SA's and applicable legal and regulatory requirements. Audit documentation serves number of additional purposes such as quality control review, external inspections.

B) Materiality assessment in planning and performing the audit (SA 450 deals with it)

SA450 deals with auditors responsibilty to apply the cocept of materiality in planning and performing the audit of financial statements. SA 450 explains how materiality is applied in evaluating the effect of idetified misstatements on the audit and of uncorrected misstatements.

C) Audit Risk Model (SA 315 deals with it)

As per SA 315, the auditor should identify and assess the risk of material misstatement, whether due to error or fraud, at the financail statements and assertions levels. He should understand the entity and its environment, including the entity's internal control. Thus he can design and implement responses to the assessed risk of material misstatement which help the auditor to reduce the risk of material misstatement to acceptably low level.

D) Analytical procedures(SA 520 deals with it)

As per SA 520 Auditors objective is to obtain evidences when using Substantive analytical procedures and Design and perform analytical procedures near end of audit to conclude whether financial statements are cosistent with auditors understanding of the entity

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