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7 Cards in this Set
- Front
- Back
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Name each step in the RAMP Method |
Risk Approach Materiality Procedures |
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Step 1 |
Risk
The first step of the audit plan is to assess OFSL risk (risk of material misstatement) - analyze case facts that impact risk - explain why it's a risk Conclude on OFSL risk |
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Approach (2 types) |
Combined and substantive Factors to consider: control risk and audit efficiency - identify case factors (control environment and nature of business) - analyze case facts (discuss impact) - Conclude (arrive at a clear conclusion on the approach, recommendation should be based on the ability to rely on controls and if it's efficient) |
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Materiality |
Users - materiality is completely focused on users. (Tip: list users)
Base - select a base that reflects users objectives (most common is net income before taxes)
Normalize income and remove errors for the base amount |
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Procedures |
Develop procedures to address specific account risk 1. Identify specific account ridk - analyze Financial reporting issues first because they will help determine issues 2. Design audit procedures - must be specific, detailed, and related to risk identified. Involve all necessary steps. Explain how it would test the risk |
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Tips |
- avoid being ambiguous - quality over quantity - to help achieve depth use: verb, object, verb, object, purpose (vovop) |
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RAP |
Risk Assertion + Account And procedure |
