• disagreements the predecessor had with management about accounting principles or auditing procedures 
•  communications the predecessor gave the former client about fraud, illegal acts, and internal control recommendations
•         the predecessor’s understanding about the reason for the change of auditors

During the planning stage, analytical procedures are used to identify potential problem areas so subsequent audit work can be designed to reduce the risk of not detecting a misstatement.

Tests of reasonableness which compare the auditors estimate of the account balances with those recorded by management.

5 Steps the audit team should perform during analytical procedures:

1. Develop an expectation
2. Define a significant difference
3. Compare the auditor's expectation to the recorded amounts
4. Investigate significant differences
5. Document each of the preceding steps

1. Statement that management is responsible for establishing and maintaining adequate internal controls over financial reporting
2. Statement identifying the framework management used to evaluate the effectiveness of the entity's internal controls
3. A statement providing management's assessment of the effectiveness of the entity's internal controls.

1. Opinion on the financial statements
2. The auditor's assessment of the effectiveness of the entity's internal controls

A process effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following three categories:

• Reliability of financial reporting
• effectiveness and efficiency of operations
• compliance with applicable rules and regulations

Control environment

Risk Assessment

Control Activities

Information and Communication

Monitoring

Authorization to execute transactions

Custody of the asset involved in the accounting records

Recording transactions in the accounting records

Reconciliation of existing assets to the recorded amounts

Valuation and Allocation: Although the sale did occur it is not recorded at the proper value.

• the various classes of significant transactions
• the types of material errors and fraud that could occur
• the methods by which each significant class of transactions is
  • authorized and initiated
  • documented and recorded
  • processed in the accounting system
  • placed in thte financial statements and disclosures

• Revenue and Collection
  • Credit Sales
  • Cash Receipts

Questionnaires

Narratives

Flowcharts

A condition that could adversely affect an organization's ability to initiate, record, process, and report financial data in the financial statements.

A condition that results in a reasonable possibility that a material misstatement would not be prevented or detected on a timely basis. 

1. The management is responsible for establishing and maintaining adequate internal controls over financial reporting
2. Identify the framework management uses to evaluate the effectiveness of the entity's internal controls
3. Management's assessment of the effectiveness of the entity's internal controls

1. Existence or Occurrence
2. Completeness
3. Valuation and allocation
4. Rights and obligations
5. Presentation and disclosure