Streamlining Small Audits: Quality plus Profitability

Upon successful completion of this course, participants will be able to:

Chapter 1

• Recognize the philosophies underlying cost-beneficial audit strategies for audits of small- to medium-size entities.
• Identify the components of designing audit strategies for small audits that will comply with all applicable professional standards and achieve high levels of profitability.
• Recognize performance measures and documentation requirements for auditing procedures that result in both quality and efficiency.
• Recognize components and characteristics of audit risk, materiality calculations, and sampling decisions.
• Identify appropriate engagement completion procedures.

Chapter 2

• Identify the quality control policies and procedures that comply with the AICPA’s Code of Professional Conduct and the Statement on Quality Control Standards No. 8, A Firm’s System of Quality Control (Redrafted) (QC 10).
• Recognize the components of the AICPA Practice Aid Establishing and Maintaining a System of Quality Control for a CPA Firm’s Accounting and Auditing Practice (Practice Aid), the AICPA Conceptual Framework for Independence Standards, a Guide for Complying with Rules 102-105 (integrated into the AICPA’s updated Code of Professional Conduct),and AICPA Instructions for Quality Control Materials Reviews.
• Identify when independence is required, potential impairments to independence, threats to rules violations, and preventative safeguards.
• Recognize factors that affect risk at the financial statement level and their impact on the planning process.
• Recognize when a CPA firm is responsible for establishing and maintaining a system of quality control over the development of quality control materials and what modifications can be made to established practice aids.

Chapter 3

• Recognize factors that influence the control environment and which entities are at risk from an ineffective control environment.
• Recognize audit risks for certain financial statement classifications and when an auditor can reduce overall evidence requirements based on assessed levels of risk of material misstatement.
• Identify the components that comprise risk of material misstatement in order to understand when to perform and document risk assessment procedures.
• Recognize the definition of assertions and key cost-beneficial audit strategies for small audits.
• Identify factors that influence audit responses to potential risks of material misstatement.

Chapter 4

• Recognize components of an audit plan as required by auditing and quality control standards.
• Identify the steps of audit planning that prioritize the purposes and substance of engagement planning first and the procedures and documentation second.
• Recognize the importance of engagement planning activities in promoting audit efficiency and profitability.
• Recognize the importance of a standardized planning document in planning and organizing audit documentation before beginning the work.
• Recognize the purpose of an engagement letter and how it should be incorporated throughout an engagement.

Chapter 5

• Recognize the history and evolution of the components of internal control.
• Identify key controls at the entity level and the activity level.
• Recognize the use of internal controls based on the nature, size, and complexity of an entity.
• Identify the purpose of flowchart documentation for accounting and internal control systems.
• Recognize the importance and critical elements of analyzing and documenting control deficiencies on small audits.

Chapter 6

• Recognize key elements and requirements of the risk assessment standards.
• Identify cost-beneficial audit strategies that an auditor must consider to maximize planning efficiency.
• Recognize what comprises a financial statement assertion and how to tailor audit objectives to relevant financial statement assertions.

Chapter 7

• Recognize the definitions, use, and impact of planning materiality, tolerable misstatement (performance materiality), and the lower limit of individually significant items (ISIs) on small audits.
• Identify the elements of accurate error analysis.
• Recognize the concepts and requirements of sampling and strategies not to sample.

Chapter 8

• Identify the purpose of a firm’s quality control document, practice aids, and working papers.
• Recognize key auditing standards requirements for audit documentation and risk assessment.
• Recognize techniques to tailor an audit program using the minimum practice aids and documentation that supports cost-beneficial audit strategies for smaller audits.
• Identify alternative ways to document compliance and use ‘just enough working papers.’

Chapter 9

• Recognize key characteristics and team responsibilities in a risk-based approach to reviewing engagements.
• Recognize the documentation requirements for completing an engagement review and a subsequent Engagement Review Checklist.

Chapter 10

• Recognize the phases of the audit process and the negative effects on the completion phase that result when tasks are completed out of order.
• Identify the key functions, responsibilities, and time-saving opportunities for efficient engagement completion.
• Identify checklist items and procedures for each of the audit phases that will help prevent wasted time during wrap up and increase audit profitability.

Chapter 11

• Recognize the process and planning framework for preparing financial statements, footnotes, and audit reports.
• Identify the types of audit report modifications and when they are applicable.
• Recognize important issues and reporting requirements of AU-C 265 of the Clarified Auditing Standards, Communicating Internal Control Related Matters Identified in an Audit.
• Recognize the importance of an auditor’s deliverables.