What does it mean to create an audit strategy?
The auditor must first develop an overall audit strategy. Developing overall audit strategy will enable the auditor to determine what amount of time and resources that they might have available.
The overall audit strategy will broadly consist of figuring out the nature, timing, and extent of all audit procedures:
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What are some examples of misappropriation of assets?
Misappropriation of assets is more easily understood as stealing. There are countless stories of employees committing fraud and it can ruin your career!
What is the relationship between audit risk and materiality?
Audit risk has an inverse relationship with materiality. The lower the materiality, the higher the audit risk as a lower materiality means there is less room for error.
If detection risk is set at low, then should I perform more or less substantive testing?
When detection risk is set at low, then that means that risk of material misstatement was assessed to be high. Since detection risk is set at low, that means that the audit team will have to perform a HIGHER amount of substantive testing in order to reduce the risk of not detecting a material misstatement. […]