DECIDING THE NATURE AND EXTENT OF AUDIT PROCEDURES

• Audit procedures are planned by assertion for significant financial statement areas.

• Deciding the nature and extent of audit procedures involves choosing the optimum combination of:

- tests of control (ToCs);

- substantive analytical procedures (SAPs); and/or

- other substantive procedures (OSPs)

that will be both effective and efficient in providing appropriate sufficient and reliable audit evidence.

• Key inputs into this decision will be:

- our assessment of the risk of material misstatement due to fraud or error

- our understanding of the entity and its environment including its internal control

- our assessment as to the design and implementation of the entity’s controls; and