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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:

Steps in an audit engagement

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.

3) Responding to risk: Determining where to focus audit procedures. Properly plan the audit and implement the audit strategy, and determine areas that have more materiality considerations.

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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