5.12 Materiality Assessment Form Materiality can be defined as follows: error (or the sum of the errors) is material if the “An error (or the sum of the errors) is big enough to influence the users of the Financial Statements”. Assessing materiality is an important aspect of modern systems-based audits. This form provides guidelines and suggestions for assessing an appropriate materiality amount for the audit at hand. Note: For a comprehensive discussion on Materiality, see section 7.3.l and Appendix D of FAM. 5.13 Expected Aggregate Error and Planned Precision Form values which are important in determining appropriate sample size and in evaluating the results of the audit are expected aggregate error and planned precision. This form provides detailed instructions for arriving at these values for the audit at hand. 5.14 Audit Risk Assessment Form It is important that the team establishes an appropriate level of risk for the audit. The concept of risk is very important in planning system-based audits and is discussed at length in sections 7.7 and 7.8 of the Financial Audit Manual. This form is used to identify whether there are any particular factors that would cause the auditor to reduce the level of risk he or she is willing to accept, therefore requiring additional audit work to be planned so as to raise the level of audit assurance. The auditor should be observant for any possible risks that could affect the financial and operational performance of organization. The auditor should decide what aspects of these risks to take into account when planning the audit. 5.15 Inherent Risk Assessment Form Inherent risk is the chance of material error occurring in the first place assuming that there are no internal controls in place. error” may be a single error or the sum of multiple “Material smaller errors. This form indicates some factors which may influence the auditor’s assessment of inherent risk. Inherent risk should be assessed for each Financial Audit and compliance with authority objective. However, because the auditor’s assessment of inherent risk may be the same for multiple objectives or components, this form can be used to capture risk for each group of objectives or components that the auditor wishes to treat in the same manner.
5.12 Materiality Assessment Form Materiality can be defined as follows: “An error (or the sum of the errors) is material if the error (or the sum of the errors) is big enough to influence the users of the Financial Statements”. Assessing materiality is an important aspect of modern systems-based audits. This form provides guidelines and suggestions for assessing an appropriate materiality amount for the audit at hand. Note: For a comprehensive discussion on Materiality, see section 7.3.l and Appendix D of FAM. 5.13 Expected Aggregate Error and Planned Precision Form values which are important in determining appropriate sample size and in evaluating the results of the audit are expected aggregate error and planned precision. This form provides detailed instructions for arriving at these values for the audit at hand. 5.14 Audit Risk Assessment Form It is important that the team establishes an appropriate level of risk for the audit. The concept of risk is very important in planning system-based audits and is discussed at length in sections 7.7 and 7.8 of the Financial Audit Manual. This form is used to identify whether there are any particular factors that would cause the auditor to reduce the level of risk he or she is willing to accept, therefore requiring additional audit work to be planned so as to raise the level of audit assurance. The auditor should be observant for any possible risks that could affect the financial and operational performance of organization. The auditor should decide what aspects of these risks to take into account when planning the audit. 5.15 Inherent Risk Assessment Form Inherent risk is the chance of material error occurring in the first place assuming that there are no internal controls in place. “Material error” may be a single error or the sum of multiple smaller errors. This form indicates some factors which may influence the auditor’s assessment of inherent risk. Inherent risk should be assessed for each Financial Audit and compliance with authority objective. However, because the auditor’s assessment of inherent risk may be the same for multiple objectives or components, this form can be used to capture risk for each group of objectives or components that the auditor wishes to treat in the same manner.
Commercial%20Audit%20Guidelines-Final%2025%20Mar%202010%20.docx