Concept and need for assurance Flashcards
What are the key elements of assurance?
Third party involvement, subject matter, suitable criteria, evidence, and written report.
Who is part of the third party relationship?
Practitioner (auditor), Intended user (stakeholders), and the Responsible party (directors).
What are the requirements of a statutory audit?
UK companies are governed by the Companies Act 2006 and ISAs.
Requirements of an auditor?
Be a member of an RSB, or part of a firm run by qualified auditors, and not an employee/partner of the company.
Benefits of an audit?
Independent, adds credibility, has subsidiary benefits, identifies issues, and reduces risk.
Limitations of an audit?
Sampling, inherent limitation of systems, evidence is persuasive, collusion, subjectivity, having to rely on management representations.
Who determines the suitable criteria and prepares subject matter?
The responsible party
Who gathers evidence on the subject matter?
The practitioner
