Question

John Josephs, an audit manager for Tip, Acanoe & Tylerto, was asked to speak at a dinner meeting of the local Small Business Administration Association. The president of the association has suggested that he talk about the various phases of the audit process to help small business owners better understand what auditors do. John has asked you, his trusted assistant, to prepare an outline for his speech. He suggests that you answer the following: a. Below are the various phases of an audit. Using the column on the right, determine the correct order of each phase (1 - first, 7 - last). Order Audit Phase Plan the audit Complete the audit Client acceptance/continuance Audit business processes and related accounts Preliminary engagement activities Evaluate results and issue the audit report Consider and audit internal control 7
These are more choices to choose from.

Answer 1

a) Order of the given audit phase are as below:

Audit Phase	Order
Plan the audit	3
Complete the audit	6
Client acceptance / continuance	1
Audit business processes and related accounts	5
Preliminary engagement activities	2
Evaluate results and issue the audit report	7
Consider and audit internal control	4

b) Match the specific phase of the given definition of each phase:

The Auditor understands and evaluates the client's internal ….........	Consider and audit internal control
Based on the collection and evaluation of evidence, …..............	Evaluate results and issue the audit report
During this phase of the audit, the auditor uses the knowledge….......	Plan the audit
The auditor decides to accept a new client or retain an existing client	Client acceptance / continuance
The auditor searches for contingent liabilities and subsequent….....	Complete the audit
This phase involves 1) determining the audit engagement …...	Preliminary engagement activities
The auditor conducts substantive tests, including analytical …..	Audit business processes and related accounts

c) Internal control assures to the members of association that all transactions are accounted accurately and in timely manner. Financial reports are reliable and comply with applicable laws and rules of accounting. Thus, accuracy, timeliness, reliability, compliance and efficiency are assured with appropriate internal control procedures and hence members of association consider this as an important phase of audit.