- Obtaining an understanding of the entity's business and the industry
in which it operates.
- Inquiries concerning the entity's accounting principles, policies
- Inquiries concerning the entity's procedures for recording,
classifying and summarising transactions, accumulating information for
disclosure in the financial statements and preparing financial
- Inquiries concerning all material assertions in the financial
- Analytical procedures designed to identify relationships and
individual items that appear unusual. Such procedures would include:
- Comparison of the financial statements with statements for prior periods.
- Comparison of the financial statements with anticipated results and financial position.
- Study of the relationships of the elements of the financial statements that would be expected to conform to a predictable pattern based on the entity's experience or industry norm.
In applying these procedures, the auditor would consider the types of matters that required accounting adjustments in prior periods.
- Inquiries concerning actions taken at meetings of shareholders, the
board of directors, committees of the board of directors and other
meetings that may affect the financial statements.
- Reading the financial statements to consider, on the basis of
information coming to the auditor's attention, whether the financial
statements appear to conform to the basis of accounting indicated.
- Obtaining reports from other auditors, if any and if considered
necessary, who have been engaged to audit or review the financial
statements of components of the entity.
- Inquiries of persons having responsibility for financial and
accounting matters concerning, for example:
- Whether all transactions have been recorded.
- Whether the financial statements have been prepared in accordance with the basis of accounting policies indicated.
- Changes in the entity's business activities and accounting principles, policies and practices.
- Matters as to which questions have arisen in the course of
applying the foregoing procedures.
- Obtaining written representations from management when considered appropriate.
The list is not exhaustive, nor is it intended that all the procedures suggested apply to every engagement.