What is the timeline of events in an audit engagement?
An audit engagement typically has 7 key steps that must be performed. The 7 key steps include:
1) Engagement acceptance: Determine of the auditor is considered independent and has an understanding of the engagement.
2) Planning / Assessing risk: Performing risk assessment procedures (analytics) and obtain an understanding of the client’s internal controls, industry, and environment.
4) Test internal controls: Perform test of internal controls.
5) Perform substantive procedures: Perform test of details for each transaction cycle in order to obtain audit evidence.
6) Formulate conclusions: Determine subsequent events, obtain management representation letters, and evaluate audit findings. Additionally, the team should perform final review analytical procedures.
7) Report audit opinions: Based on the audit evidence, properly report the auditor’s opinion (i.e. unmodified/unqualified or a modified opinion – adverse, disclaimer, or qualified).
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