Podcast
Questions and Answers
What should be a key focus to address RMM in an audit?
What should be a key focus to address RMM in an audit?
- Developing a fixed approach to procedures
- Maintaining professional skepticism (correct)
- Assigning routine staff members to audits
- Avoiding unpredictability in testing
Which factor is NOT considered when determining the extent of audit procedures?
Which factor is NOT considered when determining the extent of audit procedures?
- Size of sample
- Expected rate of deviation
- Timing of the audit completion (correct)
- Tolerable rate of deviation
When a subsequent event arises, what action is NOT necessary for auditors?
When a subsequent event arises, what action is NOT necessary for auditors?
- Modify the audit report
- Withdraw from the engagement
- Evaluate if the event misleads report users
- Notify the report users about routine upgrades (correct)
What is the auditor's responsibility regarding a security breach?
What is the auditor's responsibility regarding a security breach?
How should auditors handle undisclosed events that could mislead report users?
How should auditors handle undisclosed events that could mislead report users?
Flashcards
How to address RMM in an audit?
How to address RMM in an audit?
To minimize risk in an audit, auditors must critically evaluate the client's information and operations. They use their experience and expertise to identify potential issues and ensure the reliability of the audit results.
Nature, Extent, Timing of Procedures
Nature, Extent, Timing of Procedures
A set of guidelines that determine how an audit should be conducted, including the scope of procedures, evidence gathering, and timing of activities.
SOC Subsequent Events
SOC Subsequent Events
Events that occur after the audit period but may affect the financial statements.
Auditor Responsibility for Subsequent Events
Auditor Responsibility for Subsequent Events
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Auditor Responsibility when there is a Security Breach
Auditor Responsibility when there is a Security Breach
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Study Notes
Addressing Risk Management Matrix (RMM) in an Audit
- Maintain professional skepticism throughout the audit process.
- Assign more experienced staff or specialists to handle complex RMM components.
- Provide additional supervision to ensure thoroughness and quality control.
- Introduce unpredictability in audit procedures to prevent patterns and ensure controls are tested effectively.
- Modify the NET (Nature, Extent, Timing) of procedures as needed, based on the RMM assessment.
Nature, Extent, and Timing of Procedures (NET)
- Nature: Involves inquiries, efficient item selection methods, and assessment of completeness and accuracy.
- Extent: Depends on sample size, observation frequency, tolerable deviation rates, and expected deviation rates—all of which inform audit scope and effort.
- Timing: Can occur at interim dates or at the end of the fiscal year – determined by audit scope and risk assessments.
SOC Subsequent Events
- Auditors don't actively search for subsequent events. However, they must address events that are brought to their attention.
- Evaluate whether undisclosed events could mislead report users.
- May necessitate reporting modifications or report withdrawal.
- Routine upgrades/maintenance do not typically require disclosure.
Subsequent Events - Notifications
- Auditors must use professional judgment to ascertain whether and how to communicate subsequent events to report users.
Auditor Responsibility for Security Breaches
- Inquire with management regarding controls in place to detect, report, and obtain evidence related to security breaches.
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Description
This quiz explores key concepts in risk management matrices as they pertain to auditing. It covers professional skepticism, the nature, extent, and timing of audit procedures, and the importance of addressing subsequent events in the audit process. Test your understanding and application of these critical audit principles.
