Conducting an Audit Process: Analytical Procedures and Objectives

School: Southern New Hampshire University - Course: ACC 630 - Subject: Accounting

The Audit Process Jason Watkins-Yates Southern New Hampshire University February 21, 2023 Describe how you would conduct the audit process, incorporating the analytical procedures you would use to investigate selected business transactions. I would perform the audit process by first creating a clear objective.

The overall objective of an audit is to determine whether the company's financial statements are free from misrepresentation. Misrepresentation is "a difference between the amount, classification, presentation, or disclosure of a reported financial statement item and the amount, classification, presentation, or disclosure required for the item to be per the applicable financial reporting framework." As soon as this objective has been defined, I will take the following steps to review the company's business transactions: •Look into the financial statements for a specific time frame. •The method for examining financial statements is the cycle approach. (The cycle approach maintains closely related classes of transactions and account balances in the same section.) The mindset when utilizing this method ties to how transactions are recorded and summarized. •Comply with the following objectives to come to the conclusion that the transactions were recorded correctly. • Transaction-related audit objectives - Occurrence, completeness, accuracy, posting and summarization, classification, and timing. • Balance-related audit objectives - Existence, completeness, accuracy, classification, cut-off, detail tie-in, realizable value, and rights and obligations. • Presentation & disclosure-related audit objectives - Occurrence and rights and obligations, completeness, accuracy and valuation, and classification and understandability.

•Ascertain management's assertions about said financial statements. The AICPA categorizes assertions into three categories as follows: •Assertions about the classes of transactions and events in the period under audit. •Occurrence-did the transaction occur during the specified accounting period? •Completeness-all transactions and events that should have been recorded during the specified period have been. •Accuracy transactions have been recorded appropriately. •Classification transactions have been recorded to the proper accounts. •Cut-off transactions have been recorded in the correct reporting period. •Assertions regarding account balances at period-end. •Existence-Assets, liabilities, and equity interest exist. •Completeness-All the above that should have been recorded have been. •Valuation and allocations-All the above were included in financial statements at the appropriate amounts, and the necessary adjustments have been recorded correctly. •Assertions regarding the presentations and disclosure. •The occurrence and rights and obligations transactions disclosed occurred and are directly related to the company under audit. •Completeness-all disclosers that should be included in the financial statements have been. •Accuracy and valuation information was appropriately disclosed at an appropriate amount.