Lesson: Selection of Audit Procedures

In this lesson, the selection of audit procedures is discussed, emphasizing the importance of basing these selections on the risk of material misstatement. The lesson explains how higher risks require more reliable and relevant audit evidence, which may affect both the types of audit procedures and their combination. The lesson also considers the reasons for the assessment of risk of material misstatement and discusses two examples where different approaches may be used, such as substantive analytical procedures alone providing sufficient appropriate evidence when the risk is low, or performing tests on controls when the risk is lower due to effective controls. Finally, the lesson addresses obtaining audit evidence from the entity's information system and the need to ensure the accuracy and completeness of such information when used in performing audit procedures.