Question

List and describe three main categories of audit procedures and describe their purpose.

Answer 1

Risk assessment procedures. -Processes executed by the auditor to acquire information for finding and evaluating the threats of material misstatement in the financial statements whether owing to error or fraud. Risk assessment procedures by themselves do not make available adequate suitable proof on which to base an audit opinion, but are used for purposes of scheduling the audit.

Tests of controls. - Audit procedures considered to assess the functioning efficiency of controls in avoiding, or detecting and correcting, material misstatements, stereotypically at the contention level.

Substantive procedures. - Audit procedures planned to detect material misstatements in accounts which include tests of details and substantive analytical procedures