Page 16 - Auditinf Electronic System

a- What would be the level of planned detection risk (DR) needed to achieve the
acceptable audit risk (AR) of 5 percent?

b- Let us reduce the control risk (CR) value to 40 percent and recalculate DR.

Notice that to achieve an acceptable level of audit risk in the first example. the
auditor must set planned detection risk lower (20 percent) than in the second example
(31 per- cent). This is because the internal control structure in the first example is
riskier (60 percent) than it is in the second case (40 percent). To achieve the planned
detection of 20 percent in the first example, the auditor will need to perform more
substantive tests than in the second example, where the detections risk is lower while
control risk is higher.

PHASE 3: Fieldwork and implementing the auditing procedures (4 steps)

1) Step 1: Test of controls
Test of controls are audit procedures performed by auditors to evaluate the

effectiveness of the controls applied.
EX: assume a client’s internal controls require matching of all relevant terms

on the customer sales order, shipping document, and sales invoice before
transmitting sales invoices to customers. This control is directly related to the
occurrence and accuracy transaction-related audit objectives for sales. The auditor
might test the effectiveness of this control by comparing a sample of sales invoices
to related shipping documents and customer sales orders.

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‫جميع الحقوق محفوظة ـ الإعتداء على حق المؤلف بالنسخ أو الطباعة يعرض فاعله للمسائلة القانونية‬