Decision making activities
A decision making activity in auditing corresponds to the
activity of choice in human information processing theory. There is
essentially only one decision-making activity and that is simply
the activity of choosing a particular course of action. Thus, the
auditor's choice is closely followed by an action of some kind.
Each of the audit stages concludes with a decision [and
subsequent action] as follows:
- the client accept/ retain (or reject/ relinquish) decision in
the client acceptance/ retention stage of the audit. [Subsequent
action: accept/ retain or reject/ relinquish the prospective/
continuing client, resulting in an engagement letter.]
- the finalization of the audit plan, incorporating the audit approach, in the audit planning stage.
[Subsequent action: begin the implementation of the audit approach,
commencing with the operational planning of each of the control
testing, substantive testing and opinion formulation stages.]
- the decision as to whether reliance should continue to be
placed on the management's internal control procedures. [Subsequent
action: if appropriate, amend the audit approach, as part of
operational planning in the substantive testing stage. This will
normally require a change in the nature, timing and extent of
planned substantive procedures.]
- the decision as to the appropriate conclusion on individual
account balances in the substantive testing stage. [Subsequent
action: if appropriate, amend the audit approach as part of
operational planning in the opinion formulation stage.]
- the decision as to the appropriate audit opinion in the
substantive testing stage. [Subsequent action: issue the
appropriate audit opinion.]
Copyright, Australian Educational Research
Pty Ltd. Any person accessing this site agrees to the
Terms of Use.
