Analytical Review Risk Modelling and Reporting
Last update:CCH Audit Automation
Inherent Risk Questions
This document outlines the process for assessing inherent risk in clients through a systematic approach of questions. The system can store up to 99 risk areas, each containing 99 questions, which are assigned point scores for "Yes" and "No" answers. It details steps for editing, adding, and deleting risk areas and questions, including interface navigation and confirmation prompts. Additionally, it emphasizes that once numbers are assigned to risk areas or questions, they cannot be changed. The document serves as a guide for managing inherent risk assessments effectively.
CCH Audit Automation
Audit Risks
This document details the functionality of CCH Audit Automation for recording Identified Audit Risks, also referred to as Significant Business Risks. It provides instructions for users to add, edit, and manage risks, including features for maintaining risks for future audits, assessing their significance, and linking them to assertions. The system includes tools for risk assessment, audit response, and documenting conclusions. Other functionalities encompass risk summarization, printing options, and risk linkage across multiple sources, enhancing the audit process's efficiency and accountability.
CCH Audit Automation
Default Specific Risk Questions
CCH Audit Automation allows users to define specific risk questions for audit areas, although it's not mandatory. If no specific questions are set, default questions will be used. Users can edit the default questions through the "Specific risk questions" option in the Risk Model section. Up to 99 default questions can be defined, similar to inherent risk questions. The system utilizes a lookup table that combines specific and inherent risks for audits, with editing instructions provided in the manual.
CCH Audit Automation
Risk/Sample Selection
This document outlines the concept of audit risk, defined as the likelihood of undetected material errors during an audit. It introduces a risk model used in Audit Automation that requires total audit risk to remain below acceptable levels across various audit areas. The risks are broken down into inherent risk, control risk, and detection risk, with further subdivisions for detection risk. It emphasizes the importance of understanding these concepts to design effective audit procedures and assess risk at different levels. Additionally, it discusses general and control environments, and the calculation of residual risk, alongside a risk scoring system.
CCH Audit Automation
Inherent Risks
The document outlines the procedure for addressing inherent risk questions in an audit context. Users can access a dedicated window to view up to 99 risk areas, answer questions, and modify responses as necessary. The system prompts users to validate changes to ensure proper risk assessments. It includes functionalities for viewing prior comments, copying text, and overriding calculated risk levels, emphasizing that auditor judgment is crucial. Comments on overrides must be provided to rationalize any adjustments made. The document serves as a guide for navigating and utilizing the auditing software effectively.
CCH Audit Automation
Default Identified Risks
This document outlines the process for authors of master packs to define, edit, and manage default identified risks applicable to linked clients. It details how these risks are automatically included in new client profiles but not in existing ones. Users can add, edit, or delete risks, with specific instructions on customizing risk profiles, justifications, and associated assertions. The document also includes guidance on printing identified risks. Overall, it serves as a comprehensive guide for managing risk documentation within the master pack system.
CCH Audit Automation
Area Risk Assessment
This document outlines the process for reviewing and assessing identified risks within specific audit areas. It details steps for accessing risk assessment tools, evaluating risks of material misstatement, documenting client information, and configuring audit procedures. The guidelines emphasize the importance of risk assessment as per ISA 315 standards, including necessary reviews and documentation. It also explains how to manage risk across assertions, create work programs, and generate reports that summarize risk settings, planned procedures, and overall client risk profiles. Notably, specific configurations depend on the master pack used, impacting the assessment workflow.
CCH Audit Automation
Look Up Tables
The document outlines the functionality of CCH Audit Automation, focusing on its risk evaluation process through user-definable lookup tables. It details how to edit these tables and their specific use in audit risk assessment, including inherent risk, non-sampling detection risk, and control risk. Users can print tables, set band names for risk levels, and determine sample sizes based on calculated audit risk. Additionally, it includes sections on charge rates for budgeting purposes and the option to import these rates from other master packs. Variations in the ISA model are noted throughout.
CCH Audit Automation
Assertion Selection
The document outlines the process for identifying an audit area and assertion combination in a specified section. It instructs users to enter the required information through a dialog interface. Users can select an area from a list, view associated assertions, and confirm their selection by clicking the [OK] button, allowing the system to return the chosen combination. An illustrative image accompanies the text to aid understanding.
CCH Audit Automation
Audit Assertions
The document provides guidance for the master pack designer on managing audit assertions within an auditing system. It outlines steps to create, edit, and delete assertions, including how to access the audit assertions dialog and input codes and descriptions. Users can add new assertions using an add button, edit existing ones by double-clicking or selecting and clicking edit, and delete assertions with confirmation. The document aims to assist users in effectively organizing their audit assertions.
CCH Audit Automation
Control Environment
This document details the assessment of the control environment prior to evaluating area risk in audit planning. It highlights the process for selecting the Control Environment option, mentions the differences in master packs (IPCAS and IFULL), and notes the absence of 'Control environment' questions in the Mercia master packs post-November 2022 release. It also explains how the control environment assessment functions similar to proprietorial controls, using a question format to gauge the strength of the environment and involves a lookup table for point conversion.
CCH Audit Automation
Risk Model Deactivation
The document outlines the changes in a client pack when a Master Pack is designed without a risk model. Key changes include renaming the "Risk analysis" tool to "Materiality," inactivation of risk analysis options, disabling "Outstanding questions" review, and no checks on audit programs regarding risk model completeness. Additionally, certain planning items are deactivated, and no risk-related pages are included in the planning section. However, the materiality calculation remains accessible for potential use, even if risk assessment is deemed irrelevant.
CCH Audit Automation
Trend Analysis
The document discusses a system for analyzing financial trends using historical trial balance data. It requires at least two years of data for accurate calculations, producing five trend lines per account to find the best fit for projections. Trend analysis can be accessed through the Planning menu and includes options for setting exception limits for reporting variances. Additionally, the system allows updating current figures based on these projections, ensuring accuracy in the trial balance. Users can review correlation figures and make necessary adjustments before finalizing the projections.
CCH Audit Automation
Sample Size Calculation
The document describes a system for calculating sample sizes and risk factors for standard and pool tests in auditing. It outlines how sample sizes are determined based on the highest risk associated with audit assertions, with provisions for maximum sizes and adjustments post-planning. The system ensures all tests link to relevant assertions and prompts recalculations if risk levels change. Additionally, it manages stratification calculations and allows for clearing data during balance forwards. Overall, the process aims to provide precise audit evidence based on variable risk levels.
CCH Audit Automation
Sample Size - The Calculators
CCH Audit Automation offers three calculators: the Add Lister for checking entries with editable features, the Sample Interval Selector for identifying items exceeding a specified limit for testing, and the Sample Stratification Calculator for determining sample sizes within a stratified population. Users can import data, edit entries, and print results from any calculator. Each calculator provides unique functionalities to assist in audit processes, including a method to analyze risk factors linked to specific items for informed sampling decisions.
CCH Audit Automation
Running the Risk Model
The document outlines the audit process within a planning menu, highlighting risk assessment routines accessible via the drop-down [Risk analysis] button. It describes the feature that automatically associates mandatory tests with assertions in the Residual Risk program, streamlining the audit efficiency. Additionally, it details how the system prepopulates test selections for all assertions with relevant standard and mandatory tests. This automation aids auditors in creating comprehensive and accurate checklists and ensures adherence to required procedures throughout the audit process.
CCH Audit Automation
Review Unanswered Risk Questions
The document outlines a planning system that verifies the completion of planning records by checking for answered risk questions at various stages. Users can also manually check for outstanding questions through the Planning section. If any questions remain unanswered, the system provides a dialog listing these areas, allowing users to drill down and respond. The instructions include how to navigate the interface to address these questions effectively.
CCH Audit Automation
Preliminary Analytical Review
This document outlines the process for recording a preliminary analytical review using CCH Audit Automation. It details how to access the feature, the specific data columns available, and how to input or edit financial data. Users can manage budgets, set materiality thresholds, and document audit risks. The system allows users to freeze figures, add sub-areas for detailed analysis, and generate reports. Additional features include adjusting display settings and providing options to print or save reports. Overall, it serves as a comprehensive guide for effectively utilizing the analytical tools within the software.
CCH Audit Automation
Materiality
The document outlines the process of using Audit Automation to calculate and review materiality figures for audits. It describes the calculation of up to four materiality factors, including a base figure and three alternatives, with the base figure being prioritized. Users can override calculated figures if deemed necessary, providing justifications for these adjustments. Additionally, it explains how performance and sampling materiality can be adjusted on a client-specific basis and includes the option to modify levels considered trivial. Overrides require a reason to be documented before saving changes.
CCH Audit Automation
Key Accounting Estimates
This document outlines a new functionality for managing key accounting estimates (KAE) in audit files, allowing for their creation during the planning stage and integration into the audit process. It highlights improvements in handling multiple KAE, the establishment of a dedicated database for KAE, and the development of tailored audit tests that are pulled from master packs. Additionally, it explains how users can access and view KAE in both review mode and standard audit formats, enhancing the overall efficiency of the auditing process.