NTP modul 2 prosesauditing rev sept2016

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PEMERIKSAAN AKUTANSI

AUDIT PROCES

YULAZRI M.AK., CA., CPA

(2)

(3)

Materi Sebelum UTS

PENGANTAR AUDIT AUDIT PROSES

TANGGUNG JAWAB DAN TUJUAN AUDIT BUKTI AUDIT

KERTAS KERJA PEMERIKSAAN STANDAR AUDIT

(4)

Materi Setelah UTS

MATERIALITAS DAN AUDIT RISK INTERNAL CONTROL

DAMPAK TI PADA PROSES AUDIT KEWAJIBAN HUKUM

KODE ETIK PROFESI

(5)

KEMAMPUAN AKHIR YANG DIHARAPKAN

• _{Mahasiswa memahami tahapan proses}

audit.

• _Mahasiswa _memahami _proses

perencanaan audit.

(6)

(7)

Proses/tahap

an audit

Plannin g

Field work

Reporti ng

Risk

Risk respon

d

Reporti ng

Perencan

aan audit

(9)

First Standard of Fieldwork

(GAAS)

• _{The work is to be adequately}

planned

• _{and assistants, if any, are to be}

(10)

Three Main Reasons for

Planning

To obtain sufficient competent evidence To obtain sufficient competent evidence

for the circumstances for the circumstances

To obtain sufficient competent evidence

for the circumstances

To help keep audit costs reasonable To help keep audit costs reasonable To help keep audit costs reasonable

To help keep audit costs reasonable

To avoid misunderstanding with the client

(11)

11

Summary of General Standards

(before 2013)

Generally Accepted Auditing Standards

General : 3 General : 3

1. Adequate training

and proficiencyand proficiency 2. Independence in

2. Independence in

mental attitudemental attitude 3. Due professional

3. Due professional

carecare

Field Work : 3 Field Work : 3

1. Proper planning

and supervisionand supervision 2. Internal control

2. Internal control

understandingunderstanding 3. Sufficient

Reporting : 4 Reporting : 4

1. Statements prepared in

accordance with GAAPaccordance with GAAP 2. Circumstances when

2. Circumstances when

GAAP not followedGAAP not followed

3. Adequacy of disclosures

4. Expression of opinion

on financial statementson financial statements

(12)

(13)

(14)

(15)

Three Main Reasons for Planning

(16)

Risk Terms

_{Acceptable audit risk}

(17)

Managing Risk is an

Important Aspect of

Auditing

Acceptable audit risk – level of risk the auditor Acceptable audit risk – level of risk the auditor

will accept, that an unqualified opinion is will accept, that an unqualified opinion is

mistakenly issued. mistakenly issued.

Acceptable audit risk – level of risk the auditor

will accept, that an unqualified opinion is

mistakenly issued.

Inherent risk – likelihood of material misstatements Inherent risk – likelihood of material misstatements In accounts before I/C effectiveness is considered. In accounts before I/C effectiveness is considered. Inherent risk – likelihood of material misstatements

Inherent risk – likelihood of material misstatements

In accounts before I/C effectiveness is considered.

(18)

Initial Audit Planning

1. Client acceptance and continuance

2. Identify client’s reasons for audit

3. Obtain an understanding with the client

(19)

Client Acceptance and

Continuance

_{New client investigations}

_{If previously audited, the new auditor is} required to communicate with the

predecessor auditor

_{Client permission required}

_{Continuing clients}

(20)

Identify Reasons for the

Audit

_{Two major factors affecting acceptable risk} _{Likely statement users}

_{Intended uses of the statements}

_{Likely to accumulate more evidence for} companies that are

_{Publicly held}

(21)

Obtaining an Understanding

with the Client

_{Engagement terms should be understood} between CPA and client.

_{Standards require an engagement letter} describing:

_objectives

_{responsibilities of auditor and management} _{schedules and fees}

_{Informs client that auditor cannot guarantee} all acts of fraud will be discovered

(22)

Develop Overall Audit

Strategy

_{Preliminary audit strategy should consider} _{client’s business and industry}

_{material misstatement risk areas} _{number of client locations}

_{past effectiveness of controls}

_{Preliminary strategy helps auditor determine} resource requirements and staffing

_{staff continuity}

(23)

Understanding of the

Client’s Business and

Industry

Client business risk is the risk that the client will fail to meet its objectives.

_{Information technology}

_{Global operations}

(24)

Understanding of the

Client’s Business and

(25)

Industry and External

Environment

Reasons for obtaining an understanding of the client’s industry and external environment:

1. Risks associated with specific industries 2. Inherent risks common to all clients in

certain industries

(26)

Business Operations

and Processes

Factors the auditor should understand:

_{Major sources of revenue}

_{Key customers and suppliers} _{Sources of financing}

(27)

Tour the Plant and Offices

Touring the physical facilities enables the auditor to assess asset safeguards and interpret

(28)

Identify Related Parties

_{Affiliated companies}

_{Principal owners of the client}

_{Any other party with which the client deals}

(29)

Management and

Governance

Management establishes the strategies and processes followed by the client’s business. Governance includes:

_{Organizational} structure

_{Board activities} _{Audit committee}

activities.

Governance insights: _{Corporate charter} and bylaws

(30)

Code of Ethics

In response to the Sarbanes-Oxley Act, the SEC now requires each public company to disclose whether is has adopted a code of ethics that applies to senior management.

(31)

Client Objectives and

Strategies

Strategies are approaches followed by the Strategies are approaches followed by the entity to achieve organizational objectives. entity to achieve organizational objectives. Strategies are approaches followed by the

Strategies are approaches followed by the

entity to achieve organizational objectives.

Auditors should understand client objectives. Auditors should understand client objectives. Auditors should understand client objectives.

Auditors should understand client objectives.

 _{Effectiveness and efficiency of operations}_{Effectiveness and efficiency of operations}

 _{Financial reporting reliability}_{Financial reporting reliability}

 _{Compliance with laws and regulations}_{Compliance with laws and regulations}

(32)

Measurement and

Performance

The client’s performance measurement system The client’s performance measurement system

includes key performance indicators. Examples: includes key performance indicators. Examples: The client’s performance measurement system

The client’s performance measurement system

includes key performance indicators. Examples:

–

– market sharemarket share –

– sales per employeesales per employee –

– unit sales growthunit sales growth –

– market sharemarket share –

– sales per employeesales per employee –

– unit sales growthunit sales growth

–

– Web site visitorsWeb site visitors –

– same-store salessame-store sales –

– sales/square footsales/square foot –

– Web site visitorsWeb site visitors –

– same-store salessame-store sales –

– sales/square footsales/square foot

Performance measurement includes ratio analysis

and benchmarking against key competitors.

Performance measurement includes ratio analysis

and benchmarking against key competitors.

(33)

Assess Client Business Risk

Client business risk is the risk that the client will fail to achieve its objectives.

_{What is the auditor’s primary concern?}  _{Material misstatements in the financial}

(34)

Client’s Business, Risk, and

Risk of Material

(35)

Sarbanes-Oxley Act

Management must certify it has designed disclosure controls and procedures to

ensure that material information about business risks is made known to them.

(36)

(37)

Analytical Procedure -

Definition

• _Analytical_Analytical _Procedures_Procedures _consist_consist _of_of _the_the

evaluation of financial information in audit,

made by a study of plausible relationships

among both financial and non-financial

data.

• _{It involves analysis of significant ratios and}_{It involves analysis of significant ratios and}

trends including the fluctuations that are

inconsistent with other relevant data or

which deviate from expectations.

(38)

Definition-Contd.

• _“_“_{Expectations”, in this context, refer to the}_{Expectations”, in this context, refer to the}

auditor’s expectations of what a figure in the

accounts being audited should approximately

be as worked out from other relevant

financial and non-financial information.

• _{Their use is based on the assumption that}_{Their use is based on the assumption that}

there are relationships between items in the

accounts and that these relationships may be

expected to continue.

(39)

Analytical

Procedure:

Analytical

Procedure:

Examples

• _{The reasonableness of the figure of expenditure}_{The reasonableness of the figure of expenditure}

on

on salariessalaries can be verified by multiplying the can be verified by multiplying the average number of the employees in each grade

average number of the employees in each grade

with the average salary for the grade.

• _{The reasonableness of the}_{The reasonableness of the} _{interest on General}_{interest on General}

Provident Fund balance

(40)

Commonly

used

analytical

Commonly

used

analytical

review procedures

• _{comparisons involving a single}_{comparisons involving a single} component

component

• _{comparison across components}_{comparison across components} • _{system analysis}_{system analysis}

• _{predictive analysis}_{predictive analysis}

(41)

Comparisons involving a single

component

• _{There are two types of comparisons.}_{There are two types of comparisons.}

– _{Comparison of the recorded value of a}_{Comparison of the recorded value of a}

component with its budgeted value.

– _{Comparison of a component’s current value}_{Comparison of a component’s current value}

planning and execution stages of audit.

(42)

Comparison across

components

• _{This involves analysis of the relationship between}_{This involves analysis of the relationship between}

more than one financial statement component.

(also known as ratio analysis)

• _{Some examples are accounts receivable to}_{Some examples are accounts receivable to}

turnover ratio, inventory-turnover ratio,

gross-margin ratio, etc.

margin ratio, etc.

• _{This procedure may be used at both the planning}_{This procedure may be used at both the planning}

and execution stages of audit.

• _More_More _effective_effective _than_than _single_single _component_component

comparisons because it considers the

inter-relationships among different components and

relationships among different components and

provides assurance simultaneously for more than

one component.

(43)

System analysis

• _{This involves identification of anomalous items}_{This involves identification of anomalous items}

within an account balance rather than a macro level

analysis of the balance itself.

• _{Individual entries in transaction listings are analysed}_{Individual entries in transaction listings are analysed}

to locate unusual entries or abnormalities.

• _{This procedure can be effectively used during the}_{This procedure can be effectively used during the}

execution stage.

• _{However, it is time consuming as it may involve}_{However, it is time consuming as it may involve}

scrutiny of numerous transactions, if performed

manually.

• _{For computerized data, use of appropriate auditing}_{For computerized data, use of appropriate auditing}

software could significantly aid the adoption- of this

procedure.

(44)

Predictive analysis

• _{This involves creation of an expectation using not}_{This involves creation of an expectation using not}

just financial data but also operating or external

data, independent of the accounting system.

• _{This can be used only where sufficient information}_{This can be used only where sufficient information}

independent of the accounting system is available.

• _Also_Also _known_known _as_as _an_an _{“independent}_{“independent} _test_test _of_of

reasonableness”.

• _{For example, volume of imports and import duty rate}_{For example, volume of imports and import duty rate}

may be used to predict import duty revenue.

• _{The method is generally used in the execution stage.}_{The method is generally used in the execution stage.} • _{As it involves collection of reliable data from outside}_{As it involves collection of reliable data from outside}

the accounting system, it is more time consuming

than simpler analytical procedures.

(45)

Regression analysis

• _{This is a statistical technique that creates an}_{This is a statistical technique that creates an} equation to reveal how one variable is equation to reveal how one variable is

related to one or more other variables. related to one or more other variables.

• _{Similar in principle to predictive analysis but}_{Similar in principle to predictive analysis but} has added mathematical rigor and

has added mathematical rigor and

objectivity. objectivity.

• _{Generally used in the execution stage.}_{Generally used in the execution stage.}

• _{It requires understanding of the statistics of}_{It requires understanding of the statistics of} complex variables and is therefore not complex variables and is therefore not

“user-friendly” to the general auditor. friendly” to the general auditor.

• _{It also requires much time for application and}_{It also requires much time for application and} testing and is therefore not in frequent use.

(46)

Business analysis

• _{This is a high (macro) level analysis of financial}_{This is a high (macro) level analysis of financial}

statements involving critical ratios related to

profitability, liquidity, financial stability, debt, etc.

• _{It is a useful technique for identification of risk areas}_{It is a useful technique for identification of risk areas}

during planning and audit completion stages and

used in the execution stage.

• _{It requires detailed knowledge of general business}_{It requires detailed knowledge of general business}

relationships and trends and thus is a more useful

the particular entity being audited.

(47)

Steps

involved

in

Steps

involved

in

analytical review

• _{Develop an expectation}_{Develop an expectation}

• _{Define significant differences}_{Define significant differences}

• _Compare_Compare _the_the _actuals_actuals _with_with _the_the expectation

expectation

• _{Investigate any significant differences}_{Investigate any significant differences} between actuals and expectation

between actuals and expectation

• _{Document the first four steps and make}_{Document the first four steps and make} an audit conclusion as to whether

an audit conclusion as to whether

assurance can be drawn

(48)

Analytical procedures can be used for

different purposes at different stages

of audit, viz.,

• _{in planning the audit, to assist Audit by pointing}_{in planning the audit, to assist Audit by pointing}

areas requiring examination

• _{as substantive tests, in areas where analytical}_{as substantive tests, in areas where analytical}

procedures can be used to obtain evidential

matter regarding the accuracy of figures

• _{in reporting stage, to assist in the final stage of}_{in reporting stage, to assist in the final stage of}

the audit in assessing the conclusions Audit has

reached and in evaluation of the overall financial

statement presentation by identifying odd or

unusual figures in the final accounts.

(49)

Purposes of Analytical Review

Procedure

• _{Understand the entity}_{Understand the entity} • _{Indicate risk areas}_{Indicate risk areas}

• _{Indicate possible misstatement}_{Indicate possible misstatement} • _{Reduced detailed test}_{Reduced detailed test}

(50)

Factors to Consider

• _{Objective of the analytical procedure}_{Objective of the analytical procedure} • _{Nature of the entity}_{Nature of the entity}

• _{Knowledge gained from the previous}_{Knowledge gained from the previous}

audit

• _Availability_Availability • _Reliability_Reliability • _Relevancy_Relevancy • _Source_Source

(51)

Preliminary Analytical

Procedures

Comparison of client ratios to industry or competitor benchmarks provides an

indication of the company’s performance.

(52)

Examples of Planning

(53)

Summary of the Parts

of Auditing Planning

(54)

Planning an Audit and

Designing an Audit

Approach

_{Set materiality and assess} acceptable audit risk

and inherent risk.

_{Understand internal control} and assess control risk

_{Gather information to assess fraud risks}

(55)

State the purposes of analytical

procedures and the timing of

(56)

Analytical Procedures

1. Required in the planning phase

2. Often done during the testing phase 3. Required during the completion phase

(57)

Timing and Purposes of

(58)

Select the most appropriate

analytical procedure from among

(59)

Five Types of Analytical

Procedures

Compare client data with:

1. Industry data

2. Similar prior-period data

3. Client-determined expected results 4. Auditor-determined expected results

(60)

Compare Client and Industry

Data

Inventory turnover 3.4 3.5 3.9 3.4

Gross margin 26.3% 26.4% 27.3% 26.2%

Client

Client IndustryIndustry

(61)

(62)

Compare Client Data with

Similar Prior Period Data

Net sales $143,086 100.0 $131,226 100.0

(63)

Compute common financial ratios.

(64)

Common Financial Ratios

_{Short-term debt-paying ability}

_{Liquidity activity ratios}

_{Ability to meet long-term debt obligations}

(65)

Short-term Debt-paying

Ability

Current ratio = _{Current liabilities}Current assets

Cash ratio (Cash + Marketable securities)

Current liabilities =

Quick ratio

(Cash + Marketable securities + Net accounts receivable)

(66)

Liquidity Activity Ratios

Accounts receivable turnover

Net sales

Average gross receivables =

Days to collect receivable

365 days 365 days

Accounts receivable turnover =

Inventory turnover

Cost of goods sold Cost of goods sold Average inventory =

Days to sell inventory

365 days 365 days

(67)

Ability to Meet Long-term

Debt Obligation

Debt to equity Total liabilities

Total equity =

Times interest earned

(68)

Profitability Ratios

Earnings per share

Net income

Average common shares outstanding =

Gross profit percent

(69)

Profitability Ratios

Return on common

equity

(Income before taxes – Preferred dividends)

Average stockholders’ equity Average stockholders’ equity =

Return on assets

(70)