Chapter 1.1 - Accounting VS Auditing

Question 1

What is Accounting?

Answer 1

Process of book keeping
Accountant - prepare FS
Figures - raw & unaudited, may contain error (misstatements)

Question 2

What is Auditing?

Answer 2

A type of assurance engagement
Give an independent opinion on FS
External auditors - audit/examine FS prepared by client’s accountant
Ensure figures & disclosure in FS are true & fair