Acca aa s21 Notes

WHEN YOU FINISHED THIS CHAPTER YOU SHOULD ATTEMPT THE 
ONLINE AA MCQ TEST
 
September 2021 to June 2022 exams
Watch our free ACCA AA lectures
48

---

Only on 
OpenTuition
you can find: Free ACCA notes 
•
Free ACCA lectures 
•
Free ACCA tests 
•
Free ACCA tutor support 
•
The largest ACCA community
Chapter 8
THE STAGES OF AN AUDIT – AFTER 
APPOINTMENT
1. Overview
Plan the audit
Understand entity
Assess risk of material misstatement
Respond to risk
Expect effective controls
Expect ineffective controls
Unsatisfactory
Tests of controls
Report significant deficiencies 
to those charged with 
governance
Satisfactory
Full substantive 
procedures
Reduced substantive 
procedures
Overall review of FS
Report to management
Auditor’s report
Appointment
September 2021 to June 2022 exams
Watch our free ACCA AA lectures
49

---

Only on 
OpenTuition
you can find: Free ACCA notes 
•
Free ACCA lectures 
•
Free ACCA tests 
•
Free ACCA tutor support 
•
The largest ACCA community
All audits start by:
๏
Planning
๏
Understanding.
After these stages, the auditor can assess the risk of material misstatement and respond to that risk. 
We will see later how the risk of material misstatement can be broken down into several causes, but if 
you are dealing with a relatively new company with inexperienced staff, and which has high value, 
portable inventory and many cash transactions, you will probably see that the risk of material 
misstatement is relatively high. Audit work must then be planned to reduce the risk of material 
misstatement finding its way into the financial statements.