Question

which is the correct order for the following steps in a financial statement audit to occur?

a. Issue the audit report; perform subtractive testing: review the internal control system: evaluate management’s credentials.

b. Preform substantive testing: evaluate management’s credentials: review the internal control system: Issue the audit report;

c. review the internal control system: valuate management’s credentials: Issue the audit report;: Preform substantive testing:

d. evaluate management’s credentials: review the internal control system: Preform substantive testing: Issue the audit report

Answer 1

Financial statement audit involves the various steps which begins form the proposal given by managements for audit and the auditors acceptance of the audit.

After the audit acceptance auditors need to evaluate managements intentions or credentials there responsibility.

Once the managements credentials have been evaluated then there is need to review to the internal control system of the organisation to decide the scope and extent of audit and required procedure.

After deciding the extent and scope of audit procedure the auditors have to perform the substantial audit testing and audit procedure for verification, checking,evaluating the transactions and events needs to be done.

Once the auditors has done with the substantive testing and is satisfied that the audit report is to be provided then he issue the audit report commenting on the True and fair view of companies affairs.

Thus the correct answer is option D.

It involves evaluate management's credentials: review the internal control system: perform substantive testing: issue the audit report.