Key audit concepts
1
Overview of key concepts
 Quality and risk management
 Audit risk
 Fraud
 Professional skepticism
2
Quality and risk management
“Quality and risk management develops
and maintains policies and procedures to
help keep high standards of quality and
integrity and prevent financial and
reputational damage.”
3
Quality and risk management
 Key elements:
‒ Confidentiality.
• Protecting brand and the entity.
‒ Professional behavior.
• Actions that discredit the profession, Audit company and yourself.
4
Quality and risk management
 Do
 Keep laptop and USB secure.
 Install only licenced software on your laptop.
 Only discuss confidential information with others on the team.
 Consult with senior team members.
 Read the Code of Conduct
5
Audit risk
“Audit risk is the risk that we express an
inappropriate opinion when the financial
statements are materially misstated.
Audit risk is a function of RoMM and
detection risk.”
6
Audit risk
Audit risk
Detection risk
RoMM
Inherent risk
Control risk
7
Fraud
“Fraud
actby
byone
oneor
or
“Fraudisisan
anintentional
intentional act
more individuals among management,
those charged with governance,
employees, or third parties, involving the
use of
of deception
deception to
use
toobtain
obtainan
anunjust
unjustor
or
illegal advantage”.
8
Risk of fraud
 Your response:
‒ To understand risk indicators
‒ To maintain professional skepticism.
‒ To notify your in-charge auditor (ICA)
and/or engagement manager
immediately.
9
Fraud triangle
Opportunity
Fraud
triangle
Incentive/pressure
Attitude/rationalization
10
Professional skepticism
“Professional skepticism is an attitude
that includes a questioning mind, being
alert to conditions which may indicate
possible misstatement due to error or
fraud, and a critical assessment of audit
evidence”.
11
Professional judgment process
12
Self-reflection and coaching
13
Thank you