PART II: ASSESSING RISK AND DEVELOPING A PLAN

In this section

• Chapter 4: Understanding the Entity and Its Environment
  • Corporate Governance: Sarbanes-Oxley Act Considerations
    Learn how SOX influences corporate governance, impacts auditors, and shapes the roles of Boards of Directors and Audit Committees in safeguarding financial reporting integrity.
  • Industry and Regulatory Influences
    Explore how industry-specific variables, regulatory requirements, economic factors, and emerging issues shape audit risk assessment in the Auditing and Attestation (AUD) context.
  • Economic and Market Conditions in Auditing
    Explore how macroeconomic indicators, microeconomic factors, and global conditions influence audit risk, financial statement assertions, and engagement strategies.
  • Fraud Risk Factors (Fraud Triangle, Pressure and Opportunity)
    Explore the Fraud Triangle, its components—Pressure, Opportunity, and Rationalization—and learn how to assess fraud risk and identify organizational vulnerabilities.
• Chapter 5: Internal Control Concepts and Frameworks
  • Entity-Level Controls and the Control Environment
    A comprehensive exploration of entity-level controls, the control environment, top-down risk assessment, and best practices for CPA candidates.
  • IT Environment, General Controls, and Application Controls
    Understand how IT General Controls (ITGCs) and Application Controls interplay to ensure reliable financial reporting, system integrity, and efficient audit strategies.
  • COSO Internal Control – Integrated Framework: A Comprehensive Overview
    Explore the five core components of the COSO Internal Control – Integrated Framework, essential principles, and best practices for designing and operating effective internal controls.
  • Walkthroughs, Flowcharts, and Narratives
    A comprehensive exploration of walkthroughs, flowcharts, and narrative documentation for effective internal control analysis, including real-world audit applications, best practices, and illustrative diagrams.
  • Limitations of Internal Control and Management Override
    Discover how inherent limitations and the potential for management override can undermine even the most robust internal control frameworks, and learn strategies to detect and address these critical risks.
• Chapter 6: Identifying Risks of Material Misstatement
  • Determining Materiality and Performance Materiality
    Learn how auditors set and apply overall materiality and performance materiality thresholds, the qualitative and quantitative considerations that shape them, and the practical impact they have on audit procedures.
  • Fraud Risks: Detection, Response, and Documentation
    A comprehensive exploration of fraud risk assessment, detection strategies, response planning, and thorough documentation requirements for CPA candidates preparing for the Auditing & Attestation (AUD) section.
  • Significant Accounts, Transactions, and Assertions
    A comprehensive guide on identifying significant accounts and transactions, assessing assertions, and determining risks of material misstatement in the audit process.
  • Inherent Risks vs. Control Risks
    Explore key concepts of Inherent Risk (IR) and Control Risk (CR) within auditing, how they combine into the Risk of Material Misstatement (RMM), and practical strategies for tailoring the audit approach.
• Chapter 7: Planning the Audit Strategy and Developing the Audit Plan
  • Overall Strategy and Risk Responses
    Learn how to link risk assessments to your audit strategy, manage high-level vs. detailed responses, and incorporate materiality considerations in your overall audit plan.
  • Group Audits: Component Auditors and Consolidations
    Explore the critical aspects of group audits, including component materiality, use of component auditors, and the consolidation process for multi-entity financial statements.
  • Relying on Internal Audit, Specialists, and Others
    Learn how external auditors leverage internal auditors’ work, consult with specialists, and consider service organizations to optimize audit effectiveness and efficiency.
  • Selecting Audit Procedures: Nature, Timing, and Extent
    Learn how auditors determine the type, timing, and scope of procedures in risk-based auditing to gather sufficient and appropriate audit evidence.
  • Use of Data Analytics and Emerging Technologies in Audit Planning
    Explore the transformative power of data analytics, AI, and RPA in modern audit planning, focusing on risk identification, efficiency gains, and best practices for effective technology deployment.