Auditing Stages

The aim of this discussion is to explain how an auditor goes about the process of auditing financial statements and presents the five basic stages that the auditor performed during the financial statement audit at Maryward Primary School in Kwekwe for the year ending 31 December 2012. In order to be in a position to fulfil auditing responsibility to report on the client’s annual financial statements, the auditor followed a series of procedures and activities as required by the auditing profession. The auditor applied the following audit stages: pre-engagement activities, planning, test of controls, substantive procedures, completion and reporting.
Puttick et al (2012:102) defines an audit according to Section 1 of APA as …the examination of, in accordance with prescribed or applicable auditing standards: a) financial statements with the objective of expressing an opinion as to their fairness or compliance with the identified financial reporting framework and any statutory requirements.
Pre-engagement activities
There are five pre-engagement activities and considerations. The auditor at this stage performed a new client investigation in order to accept the new appointment as a way of managing conflicts and threats to the auditor. Assessments of any threats to the independence of the auditor was done as an audit engagement should not be accepted where the auditor‘s independence is compromised. The other assessment done was the business risk faced in order to avoid the risk of association with a client whose integrity is questionable and particularly where motivation exists to misstate disclosures in financial information or indulge in illegal business and fraudulent reporting practices as it likely to render the auditor’s business risk unacceptable. The factors considered during the investigation included business reputation of Maryward Primary School. An assessment of the complication of the audit assignment and the estimated time, required to finish the work was