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The aim of this kind of discussion should be to explain how an auditor goes about the process of auditing financial assertions and reveals the five basic stages that the auditor performed during the financial statement audit for Maryward Principal School in Kwekwe for the year closing 31 12 , 2012. In order to be in a position to satisfy auditing responsibility to record on the customer’s annual financial statements, the auditor adopted a series of methods and activities as needed by the auditing profession.

The auditor used the following audit stages: pre-engagement activities, organizing, test of controls, substantive procedures, achievement and reporting.

Puttick et al (2012: 102) identifies an audit according to Section 1 of APA as ¦the examination of, relative to prescribed or perhaps applicable auditing standards: a) financial claims with the objective of expressing a viewpoint as to their fairness or perhaps compliance with all the identified economic reporting structure and virtually any statutory requirements.

Pre-engagement activities There are five pre-engagement activities and considerations. The auditor at this stage performed a new customer investigation in order to accept the modern appointment as a means of managing conflicts and threats towards the auditor. Assessments of any kind of threats towards the independence with the auditor was done as an taxation engagement should not be accepted the place that the auditor’s freedom is sacrificed.

The different assessment carried out was the business risk experienced in order to avoid the chance of association which has a client whose integrity is questionable and particularly wherever motivation exists to misstate disclosures in financial information or perhaps indulge in illegal business and fraudulent reporting practices as it likely to give the auditor’s business risk unacceptable. The factors regarded during the investigation included organization reputation of Maryward Primary College. An evaluation of the complication of the examine assignment plus the estimated time, required to surface finish the work was done.

A great engagement letter was ready to provide the best record from the terms of the diamond. ISA 210 provides the items of an engagement letter to become sent to the customer to help prevent misunderstandings with respect to the engagement. Also, SAS 150 requires that the auditor should agree with your customer the the engagement being undertaken as well as the terms should be written therefore the letter of engagement will be required each time a new auditor appointment is usually accepted.

The primary constituent top features of a typical page of involvement are: responsibility of directors and auditors, the opportunity of the audit, other providers, fees, Applicable law (Zimbabwe) and agreement of conditions. The auditor accepted the engagement intended for the examine of the economic statements after the conclusion which the reporting construction was satisfactory. There was a contract between the auditor and Maryward Primary University, both parties decided to meet the moment changes arise and when the auditor considers the appropriateness of the subject to do so.

In preparation pertaining to the examine, the auditor had a head to to Maryward Primary University after the opening meeting with the customer. Russell (2012: 69) states that “a tour in the area to become audited is usually permissible and often times remarkably desirable. A great auditor may tour this place as part of a pre-audit trip to review files before or after the opening meeting.  Travel plans were made and a group of 3 people was identified and sent to the audit location. Planning

Relating to Puttick et al (2012) the auditor initially considers materiality at the planning stage with the audit. The auditor made a thinking of materiality in order to plan the audit in such a way that enough evidence is gathered to draw up a conclusion. Organizing materiality was based on the end of season financial statements and financial constraints. According to Millichamp (2002) materiality can be material in the event its omission/misstatement could impact the economical decisions taken on the basis of the financial statements.

The auditor also regarded inherent risk as it contains a direct effect on the nature, timing and degree of procedures the auditor plans to accomplish to gather enough appropriate taxation evidence in response to the evaluated risk of material misstatement. “Inherent risk according to ISA 400 is ” the susceptibility of an account balance or class of deals to misstatements that could be materials, individually or perhaps when aggregated with misstatements in other balances or classes, assuming that you will find no related internal controls.

The auditor assessed audit risk and inherent risk as it is an essential part of taxation planning to help in determining the quality and level of evidence accumulated and the staff that must be assigned towards the particular review. The auditor also attained an understanding with the business and its particular environment to be able to assess the likelihood of material misstatement. ISA 310 requires a sensible understanding of the client’s organization and market. The nature of the client’s business and market affects the consumer business risk and the risk of material misstatements in the monetary statements.

The auditor employed the knowledge of those risks to determine the appropriate sum of review evidence obtained. The auditor through knowledge is aware of the exposure to complications resulting from the auditor’s failure to understand comprehensively the nature of orders in the customer’s business. The understanding helped the auditor to evaluate the design and execution of particular controls that can stop or discover and rectify material misstatements on the assertions level. Control risk is the probability that the patient’s internal control system is going to fail to recognize material misstatements.

Audit risk is the risk that the auditor will undoubtedly express inappropriate opinion around the financial claims. Inherent and control risk are the organisation’s risks that exist independently of the audit of financial statements, whereas detection risk is a function of the effectiveness of an taxation procedure as well as application by auditor. Puttick et ing (2012) estimates the ISA 200 definition of detection risk: “detection risk is the risk that the auditor will not find a misstatement that is out there in an assertion that could be material, individually or perhaps when aggregated with misstatements.

The auditor inquired in to the detailed working papers, checked out legal paperwork and minutes of gatherings of the accounting system and its particular related regulates from the management and workers of the client. A description with the system was recorded and confirmed that the record is an exact description with the system and a preliminary evaluation of the inside controls was made. Audit preparing involves expanding an overall technique for performing the audit.

ISA 300 “audit strategy explains in simple terms just how audit shall be carried out as well as the “audit plan details the exact procedures to be carried out to put into action the technique and complete the audit. During planning the auditor proven an understanding with the client regarding the nature of services to get provided as well as the responsibilities of every single party through the engagement page. The auditor developed a general audit approach, an taxation plan and audit plan and noted in the operating papers each significant business cycle that is certainly, revenue, spending, fixed assets, payroll and accounting.

Preparing continued through the entire review as the auditor gathered sufficient ideal audit evidence to support the audit opinion. Performing checks of control and Substantive procedures One of the most important of all audit periods is the means of testing the internal controls. The purpose of tests settings is to get evidence that controls where audit reliability is intended, exercised throughout the amount of the economical year under audit. The tests of controls suggested that interior controls are operating successfully, the organized audit way was not to get changed.

These kinds of processes and procedures had been used to make sure that proper home loan approvals are in place before repayment is made or transactions joined in the program. The auditor used the principal method of inside control screening to randomly select transactions and checked out the source documents. The unique selection from a representative test revealed that handles are strong, so there was clearly no stage for raising the test size. A substantive treatment is the actual process of collecting physical proof of transactions and verifying the worthiness posted into a specific bank account is supported by actual documents.

This facet of the examine is the most time-consuming and is extremely detailed work. Gray (2008) propounds that at this stage realization made by the auditor has to be supported by every time by thoroughly evaluated facts that the transactions are totally and effectively recorded. While auditors cannot rely totally on management assertion of completeness, the search for unrecorded expenses and liabilities was created to yield review evidence of financial obligations that were not recorded inside the reporting period. A materials error or fraud inside the inventory includes a pervasive impact on the economical statement.

Auditing standards requires that the auditor should observe the inventory choosing and make test control. Physical products on hand at 12 months end was counted when the auditor was present to see and execute the dual direction screening to gather evidence for the existence and completeness dire. This involved the overall performance of hypostatic procedures the type, timing and extent of which responded properly to the evaluated risk of misstatement at the assertions level to obtain a level of detection risk that will lead to an acceptable level of audit risk relating to assertions within monetary statements.

Considering and ending The final level of auditing process involves evaluating and drawing conclusions on the good presentation of the financial info and the drafting of the examine report. During this stage the auditor looks at the adequacy of the data gathered for financial statement assertions. Assertions are the illustrations of managing that are represented in financial assertions, for, model, that fixed assets shown in financial claims exist and are also owned by entity and are also fairly valued.

ISA 500R: identifies assertions under three categories particularly: assertions about classes of transactions and events intended for the period under audit, assertions about account balances in the period end and dire about business presentation and disclosure. The auditor decided on the fair demonstration of dire and examined the differences among amounts as part of the financial information and amounts supported by review evidence.

The audit distinctions represent uncorrected material misstatements in the economic statements. The auditor assessed the effect of uncorrected materials misstatements within the audit and the effect of uncorrected misstatements within the financial transactions and tested whether the economical statements overall are free of material misstatement. The auditor examined the effect of such misstatements on review opinion. For this specific purpose, the auditor established one final estimate of materiality.

Following consideration of most evidence, the auditor figured financial claims were not substantially materially misstated and supervision was not requested to make suitable adjustments. The completion level of the review is the final stage when the involvement team and partner responsible for the examine perform finishing procedures, measure the sufficiency and appropriateness of audit proof gathered through the audit and findings in regards to significant dangers identified, which includes fraud risk, in order to form the audit thoughts and opinions on economical statements.

During completion techniques, the auditor reviewed the financial claims on an total basis carrying out a final synthetic review in period end financial info. The reading of additional and other relevant information and resolution with the impact of any significant matters arising were regarded. Update inquiries on specific aspects for example , fraud, regulations, regulations and evaluation of the results of audit types of procedures for all significant findings. Crafted representations coming from management recognizing its esponsibility for the design and implementation of internal controls to prevent and detect problem were acquired. Reporting The very last stage from the audit is definitely finalization. This is the creation of a report to management that summarizes all the procedures used to conduct the examine, the result of the many processes, and supporting documents. Gray (2008) states that “at this stage the auditor summarizes evidence about systems and also other aspects seen to be interesting to supervision and delivers a formal statement of comments and recommendations.

After completing fieldwork and analysis the auditor presented the first draft of findings and recommendations to the client during the exit appointment. Paragraphs twenty seven, 32, and 35b of ISA seven-hundred indicate the fact that description inside the auditor’s statement can pertain either towards the preparation and fair business presentation of the economical statements or perhaps the preparation of financial statements that provide a true and fair watch.

True or in other words that the auditor’s information provided was factual and conforms to truth and not fake, in addition the info conforms towards the required criteria and law and that the accounts of Maryward Primary College had been effectively extracted from your books and records. Reasonable in the sense that information offered is totally free of discrimination and bias and in compliance while using expected criteria and rules and that the accounts of the client reflect the substance from the business’s actual transactions.