Small Business Audits: Best Practices Including Risk Assessment and Internal Control

• Chapter 0 - Overview
  • Course Objectives
  • Introduction
  • Organization
  • Conclusion
• Chapter 1 - Characteristics of a Small Business
  • Learning Objectives
  • Introduction
  • What Is a Small Business?
  • Characteristics
    • Primary Characteristics
    • Secondary Characteristics
  • General Audit Approach for Small Businesses
  • Summary
  • Questions
• Chapter 2 - Independence Considerations
  • Learning Objectives
  • Introduction
  • Authoritative Guidance
  • Other Sources of Independence Rules
  • Application of the Independence Rules
    • Not a Covered Member
    • Formerly Employed by a Client
    • Considering Employment with an Attest Client
    • What If I Accept Employment or a Board Position with an Attest Client?
  • Family Relationships
    • Close Relatives
  • Financial Relationships
    • Mutual Fund Investments
    • Joint Closely Held Investment with a Client
    • Borrowing/Lending
    • Brokerage Account with a Client
    • Bank Account with a Client
    • Insurance Policy with a Client
    • Gifts or Entertainment from a Client
  • Business Relationships
  • Nonattest Services
    • AICPA General Requirements
    • Rules on Performing Bookkeeping Services for a Client
  • Summary
  • Questions
  • Case Studies
• Chapter 3 - Pre-Engagement Activities
  • Learning Objectives
  • Introduction
  • Client Acceptance
    • Prospective Client's Reputation
    • Communication with a Predecessor
    • Planning and Supervision
    • Assessment of Required Services
    • Meeting Professional Standards
    • Condition of the Financial Reporting System
  • Engagement Letters
    • Reasons for Engagement Letters
    • Content of the Engagement Letter
    • Common Engagement Letter Deficiencies
    • Client Resistance
  • Related Party Considerations
    • Accounting Standards
    • Audit Procedures
    • Related Parties and Fraud
  • Initial Engagements
    • Replacing Predecessor Auditors
    • Initial Audit of an Unaudited Business
  • Summary
  • Questions
• Chapter 4 - Understanding the Entity and Its Environment
  • Learning Objectives
  • Introduction
  • Information Needed
    • Extent of Understanding
    • Sufficiency of Understanding
    • Purpose of Understanding
  • Risk Assessment Procedures
  • Discussion Among the Audit Team
  • Summary
  • Questions
• Chapter 5 - Audit Risk and Materiality
  • Learning Objectives
  • Introduction
  • New SASs Related to Risk Assessment
  • Audit Risk
    • Risk of Material Misstatement
    • Detection Risk
    • Assessing the Risk of Material Misstatement
    • Considerations at the Financial Statement Level
    • Considering Internal Control when Assessing Risks
    • Significant Risks
    • Significant Financial Statement-Level Risks
    • Significant Assertion-Level Risks
    • Revision of Risk Assessment
    • Documentation
  • Materiality
    • Planning Materiality
    • Lesser Materiality for Particular Items
    • Tolerable Misstatement
    • Considerations as the Audit Progresses
    • Materiality for Evaluation
  • Summary
  • Questions
• Chapter 6 - Consideration of Internal Control
  • Learning Objectives
  • Introduction
  • TIS 8200.05
  • Definition and Components of Internal Control
    • Definition
    • Components
    • Limitations of Internal Control
  • Understanding the Control Environment
    • Control Environment Factors
    • Application to Small Entities
  • Understanding Risk Assessment
  • Focus of Risk Monitoring
  • Risk Identification
  • Risk Analysis
  • Managing Change
    • Circumstances Demanding Special Attention
  • Application to Small Entities
  • Understanding Information and Communication
    • Information
    • Communication
    • Means of Communication
    • Application to Small Entities
  • Understanding Monitoring
    • Ongoing Monitoring Activities
    • Separate Evaluations
    • Application to Small Entities
  • Understanding Control Activities
    • Essential Tasks of an Accounting System
    • Control-Related Policies and Procedures
    • Application to Small Entities
  • Procedures to Obtain an Understanding
    • Gathering Information about Internal Control
    • Documentation of Internal Control
  • Summary
  • Questions and Case
  • Case 6-1 - Extent of Understanding of Control Activities
• Chapter 7 - Internal Control Deficiencies
  • Learning Objectives
  • Introduction
  • Definitions
    • Evaluating Control Deficiencies
    • Examples of Significant Deficiencies
    • Examples of Material Weaknesses
  • Communication Requirements
    • Timing
    • Other Matters
    • Management's Written Response
    • Deficiencies Communicated but not Corrected by the Client
    • Inclusion of Additional Statements
    • Issues for Audits of Small Businesses
  • Summary
  • Questions
• Chapter 8 - Analytical Procedures
  • Learning Objectives
  • Introduction
  • Objectives and Timing of Analytical Procedures
  • Sources of Information for Analytical Procedures
  • Types of Analytical Procedures
    • Comparison of Current Financial Data to Prior Periods
    • Comparison of Current Financial Data to Budgets and Forecasts
    • Comparisons to Industry Data
    • Comparisons Using Nonfinancial Information
  • Trend Analysis
  • Ratio Analysis
  • Analytical Procedures in the Planning Phase
    • SAS No. 108 Requirements
    • Relationship with Knowledge of Client
    • Material Misstatements
    • Types of Analytical Procedures Used in Planning
  • Analytical Procedures as Substantive Tests
    • Substantive Analytical Procedures
    • Identifying Significant Differences
    • Significant Unexplained Differences
    • Required Documentation
  • Analytical Procedures in the Final Review Phase
    • Final Review Objectives
    • Approach to Final Review
    • Aggregate of Misstatements
    • Documentation
  • Audit Efficiency
  • Summary
  • Questions and Cases
  • Case 8-1
  • Case 8-2
• Chapter 9 - Designing the Audit Plan
  • Learning Objectives
  • Introduction
  • Financial Statement Assertions
  • Developing Audit Objectives
  • Audit Tests
    • Purpose of the Test
    • Types of Audit Tests
    • Adequacy of Presentation and Disclosure
  • Linking Audit Procedures to Objectives
  • Special Considerations in Selecting Procedures
    • Responsibility for Fraud Detection
    • Completeness Assertion
  • Timing of Audit Procedures
    • Timing of Substantive Procedures
    • Further Substantive Procedures
  • Summary
  • Questions
• Chapter 10 - Extent of Testing
  • Learning Objectives
  • Introduction
  • Characteristics of a Small Business
  • AU section 350, Audit Sampling
    • Applicability
    • Types of Tests
  • Determining the Extent of Testing without Sampling
    • Assess the Appropriate Level of Tolerable Misstatement
    • Determine an Amount for Individually Significant Items to Be Examined
    • Sufficient, Appropriate Audit Evidence
    • Consideration of Other Procedures
    • Evaluation
  • Planning the Extent of Testing Using Audit Sampling
    • Selection of a Representative Sample
    • Determining Sample Size
    • Projection of Misstatement Based on Sample Results
  • Summary
  • Questions and Case
  • Case 10-1
• Chapter 11 - Consideration of Fraud
  • Learning Objectives
  • Introduction
  • Overview of SAS No. 99
  • Understanding SAS No. 99
    • The Fraud Triangle
    • The Fraud Risk Assessment Process
  • Information Gathering Phase
    • Audit Team Communications
    • Inquiries of Client Personnel
    • Analytical Procedures
  • Considering Fraud Risk Factors
    • Fraudulent Financial Reporting
    • Misappropriation of Assets
  • Consider Programs and Controls and Assess Fraud Risks
    • Attributes of Risk
  • Developing an Audit Response
    • Overall Responses
    • Procedures to Address Specific Accounts or Classes of Transactions
    • Responding to the Risk of Management Override
  • Documentation
  • Fraud Issues Unique to Small Businesses
    • Owner/Manager Dominance
    • Misappropriation of Assets
  • Summary
  • Questions and Case
  • Case 11-1
• Chapter 12 - Completing the Audit
  • Learning Objectives
  • Introduction
  • Commitments and Contingencies
  • Lawyers' Letters
    • Litigation
    • Unasserted Claims
    • Client Has Not Consulted a Lawyer
  • Management Representation Letter
  • Subsequent Events
    • Types of Subsequent Events
    • Subsequent Review Procedures
  • Related Parties
  • Going Concern Considerations
    • Assessing Results of Audit Procedures
    • Conditions and Events
    • Consideration of Management Plans
    • Procedures When There Is Substantial Doubt
  • Risks and Uncertainties
  • Summary
  • Questions
• Chapter 13 - Ethics Focus: Accounting and Auditing
  • Ethics Overview
  • Recent Developments
  • Spotlight on Independence
  • Key Ethical Dilemmas
  • Addressing Ethical Dilemmas
  • Available Resources
• Chapter 14 - Latest Developments

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