Question Details

ACCT 555
WEEK 7



SEC has influence this audit. The auditor team needs to follow some standards or would be sanctioned.  The firm followed the audit standards to establish the auditor- independence. The auditor must be independent, is one the ethical principles of the American institute of certificate public accountants. There is also responsibilities, the public interest, objectivity, integrity, due care and scope of nature services. Team members are required to be objective and independent with regard to the audit. The team needs to be objective and be free of conflict. These SEC standards can be use for public and non public companies.
 
The following are initial planning of the audit:

Understanding the client- industry. The team manager Pete and two other team members Ben and Maureen have to understand the client- business. These would be good for future audits. 

Assess client- business risk. The team members have to assess the risk of material misstatements from the business.

Perform preliminary analytical procedures. The team needs to compare the business performance with the industry to support the initial assessment of business risk. This helps the team identify areas with high misstatement the risk.

The team has to set the acceptable level of materiality risk. This risk level would be subject to the auditor- judgment.

The team needs to develop an audit program and plan.  This would provide the team reasonable assurance and basis for the audit report and opinion.