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Agenda
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PwC Audit Governance
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Towards Performance Audit:
a continuous improvement program
PwC PwC
Audit Audit
2003:
• Converged
2002: approach,
• Business enhanced testing
2001: analysis guidance
• Audit Comfort framework • Enhanced client
Cycle • Enhanced audit communications,
guides/ practices transparency focus
• Management
controls focus • Scaling up - • Application to
different client small companies/
• Show me and
situations MNCs
Taking stock
• MyClient • Better use of
• Team re-
deployment integration specialists and Time
knowledge sources
Key
Risk
Key
Key Risk
Risk Key
Key Risk
Risk Key
Risk
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PwC Audit Approach
Acceptance/Continuance Assessment
Audit
Comfort
Cycle
No / Limited Significant
controls controls
comfort comfort
Other audit evidence
Mainly Mainly
tests of details substantive analytical
procedures
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PwC Audit Approach – With Attestation
Acceptance/Continuance Assessment
Broader and deeper assessment of COSO
controls over financial reporting, including
management’s evaluation of those controls.
e.g., estimates, fraud, tax accrual, more
locations.
Audit
Report on management’s assertions on
Comfort internal controls over financial reporting
Cycle
No / Limited Significant
controls controls
comfort comfort
Other audit evidence Additional procedures deemed necessary
Mainly Mainly to provide independent assurance on
tests of details substantive analytical financial statements, taking into
procedures consideration the internal controls
assessment.
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Acceptance & Continuance Process
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Acceptance & Continuance Process
Audit Comfort
3 MyClient
Matrix
Client File
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Audit Comfort Cycle
ACCEPTANCE/CONTINUANCE ASSESSMENT
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Audit Comfort Cycle
ACCEPTANCE/CONTINUANCE ASSESSMENT
SIGNIFICANT NO/LIMITED
CONTROLS CONTROLS
COMFORT COMFORT
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Scoping: Forming a Point of View
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Scoping:
Business Analysis Framework
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Scoping:
Risk Assessment – Key Risks
Business
Risks
Key Risk
Audit
Risks
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Scoping: Analytical Procedures
• High Level
– Understand the business
– Identify areas of risk
• Disaggregated Account Level
– Determine the nature, timing & extent of testing
• External benchmarking to peers, market trends
– Looking for anomalies, areas of risk
– Use of extensive knowledge management tools
available
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Scoping Translated into Audit Strategy
Business
Objectives
Risks Controls
Stakeholders
Alignment
Where controls over significant account balances or classes of transaction are not
aligned, we will need to perform substantive tests of details.
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Scoping: Audit Team of Specialists
Our best teams use our specialist capabilities to help in forming a point of view.
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Scoping: Use of Specialists
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Audit Comfort Cycle
ACCEPTANCE/CONTINUANCE ASSESSMENT
that comfort?
SUBSTANTIVE AUDIT EVIDENCE
• Can we audit that
MAINLY SUBSTANTIVE MAINLY TESTS
comfort? ANALYTICAL
PROCEDURES
OF DETAILS
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Applying Audit Comfort Cycle
from the Top-Down
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“Taking Stock”: Real-Time Linkage in
the Iterative Process
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Connecting the Dots …
Financial Statement
Business Process A Assertions/
Business Objectives
Completeness Account Audit Objectives
Accuracy Balances and
Validity Transactions Classes of
Restricted Access Transactions
Occurrence
Completeness
Business Accuracy
Business Process B Cutoff
Risks
Completeness Account Classification
related to Account
Accuracy Balances and
achieving Balances
Validity Transactions
Objectives Rights &
Restricted Access
…… Obligations
…… Existence
…… Completeness
Business Process C Accuracy/Valuation
Completeness Account Presentation &
Accuracy Balances and Disclosure
Validity Transactions Occurrence/R&O
Restricted Access Completeness
Understandability
Accuracy/Valuation
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Audit Comfort Matrix
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Summary of Comfort
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Substantive Audit Evidence
ACCEPTANCE/CONTINUANCE ASSESSMENT
Audit
comfort
cycle
SIGNIFICANT NO/LIMITED
CONTROLS CONTROLS
COMFORT COMFORT
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Achieving the Right Balance
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Assurance Hierarchy
Yes
No
Test controls.
Yes
Perform substantive
No analytical procedures.
Do we need additional
audit assurance?
Yes No
ACCEPTANCE/CONTINUANCE ASSESSMENT
Audit
comfort
cycle
SIGNIFICANT NO/LIMITED
CONTROLS CONTROLS
COMFORT COMFORT
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Other Audit Procedures:
More Connecting the Dots
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Audit Committee Communications
Framework: Objectives
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Audit Committee Communications Plan
Getting started Understanding the audit Staying informed Resolution and completion
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The PwC Audit
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