Ch # 01 Audit & Assurance Flashcards
Revise quickly Anywhere
Relationship between Shareholders and Director / Management?
Stewardship (Managing others person property)
Agent (Acts on behalf of principal)
Accountable (Directors are accountable to shareholders)
Advantages of statutory audit / Assurance engagement?
SAS LCD
S(Sale or purchase of business)
A(Auditor)
S(Statutory dudies and non-statutory duties)
L(Grant loan from bank)
C(Increase Credibility)
D(Deficiencies in internal control system)
Assurance Engagement definition?
P E2 S2 C I
P(Practitioner)
E(Evidence)
E(Evaluate)
S(Subject matter)
S(Suitable criteria)
C(Conclusion)
I(Intended users)
Elements of assurance engagement?
CREST
C(Suitable Criteria)
R(Written Assurance Report)
E(Evidence)
S(Subject Matter)
T(Three party relationship)
Non assurance engagement?
If any element is missing fron assurance engagement (P E2 S2 C I), Then it is called non-assurance engagement.
Limited Assurance?
Low level of assurace, Express in negative form.
Based on our review, Nothing has come in our attention that causes us to believe that financial statements donot give true and fair view.
Reasonable Assurance?
Moderate level of assurance, Express in positive form.
In our opinion, Financial statements give true and fair view.
Why Absolute assurance cannot be provided?
NPN LST
N(Nature of financial statements)
P(Procedures of audit based on judgement)
N(Nature of audit procedures)
S(Staff may not be available)
L(Inherent limitation of internal control system of client)
In true and fair view means?
True means free from errors, And fair means free from undue bias in prepration and presentation of financial statements.
Applicable financial reporting framework?
L NPN
L(Legal requirements)
N(Nature of entity)
P(Purpose of financial statements)
N(Nature of financial statements)
Responsibilities of management and TCWG?
DP PAIR
D(Design and implementation)
P(Prepration and presentation of F/S)
P(unrestricted access to persons)
A(Additional info.)
I(Information)
R(Written representation to auditor at end of audit)
Overall objectives / Responsibilities of auditor / audit?
FCA
F(report on Financial statements)
C(Communicate auditors findings)
A(resoanable Assurance)
Essentials of proper conduct of audit?
Professional Judgement
Professional sketicism
Independence
Professional judgement?
CAKE T
C(Cumulative)
A(Audit)
K(Knowledge)
E(Experience)
T(Training)
Professional skepticism?
QCA
Q(Questioning mind)
A(Alet to the conditions which indicates posible material misstatement)
C(Critical assessment of audit evidence)
Advantages:
Overlooking
Overgeneralizing
Inappropriate assumptions
Authority for appointment and removal of staturory auditor?
FSC MUD
6 Points
Appoint. of 1st auditor
Appoint. of subsequent auditor
Appoint. in casual vacancy
Appoint in mid-term removal
Disqualified person appoint. by the co.
Appointed auditor is unwilling to act
Legal procedures for appointment or removal or change of statutory auditor?
DR. MAN
5 points
Recom. by directors
Recom. by members
Right of retiring auditor
Appointment at AGM
Notification after appointment
Statutory Rights of Auditor?
G A R I B
G(General meeting R A S)
A(Access)
R(representation in writting)
I(Information S O A P E D)
B(Branch)
R(Receive notice)
A(Attend)
S(Speak)
S(Subsidary of company)
O(Officer)
A(Auditor)
P(Person)
E(Employee)
D(Director)
Statutory duties of auditor?
SIDE ZIP
S(Standards)
I(Information)
D(Drawn up)
E(Expenditure)
Z(Zakat)
I(Investments)
P(Proper books of accounts)
Disqualification Criteria of firm ot ind. Auditor?
PF BIRDCAGE
P(Partner)
F(Fraud)
B(Body corporate)
I(Indebted)
R(Relationship)
D(Director)
C(Code of ethics)
A(Assosiate)
G(Gurantee)
E(Employee)
