Introduction to audit Flashcards
میں نے اللہ تعالی کے پیغام کو پھیلانے کی کوشش کرنی ہے
Structure of Audit
https://drive.google.com/file/d/1dR2oATxduAzPY_TcAZKk9IxbhJvg-xk7/view?usp=drivesdk
https://drive.google.com/file/d/1kLcm9X4MYop6eRTdqCjXrQe1ZEzyNhBW/view?usp=drivesdk
https://drive.google.com/file/d/1kMM6fyhw62gNEVFOC_f4ZB8RAtW9frq6/view?usp=drivesdk
https://drive.google.com/file/d/1kMj07OdStsOucbBJoaQUUHfrZktIGZzU/view?usp=drivesdk
Advantages of audit
https://drive.google.com/file/d/1dZn-WRqMqu-YuvjCCWZlXMOyoB9OxvFA/view?usp=drivesdk
Origin of audit
https://drive.google.com/file/d/1ddNBiimoR0bL8yh9_SuLRYONwwuz0j-7/view?usp=drivesdk
https://drive.google.com/file/d/1dg63O9Bzj1oZ20ntIeUo4I2MUYSaxViG/view?usp=drivesdk
https://drive.google.com/file/d/1dgt3y8wLq9BR2oBgKzuTvwI5LaL8n37b/view?usp=drivesdk
https://drive.google.com/file/d/1dZr1oDIcQPIGsR5Woph0NiYeB-7fCk49/view?usp=drivesdk
Golden statement lecture one
✨ Golden Statements From Audit - Lecture # 1: Orientation ✨
📌 Audit is a Judgmental subject. Therefore, action/answer of one professional may be different from other.
📌 Accounting subjects are more difficult than Audit. But, passing percentage of audit is less than audit because students don’t attempt audit home assignments in written.
📌 Taking lectures from youtube may cause some problems e.g. outdated lectures, no premiums resources, no testing, no questioning.
📌 The more you ask questions, the more you learn new things.
📌 Never skip any Test, even if you are not fully prepared. If you don’t practice at Home/College, you will not perform at ICAP.
📌 Mobile is most distracting device in the world. During studies, Mobiles Off and Out of Sight.
📌 Buy a Register for written home assignments.
💥 2 hours a day = Audit passed in first attempt, 1 hour a day = Audit passed in second attempt and so on …………..
Golden Statements lecture 3
✨ Golden Statements From Audit - Lecture # 3: ✨
📌 To verify any area of financial statements, we check documents prepared in that area. Examples:
1️⃣ To verify Sales, check sales invoices.
2️⃣ To verify Purchases, check purchase invoices.
3️⃣ To verify Salaries expense, check Payroll Sheet.
4️⃣ To verify Property Plant and Equipment, check purchase invoice, or title documents. or depreciation calculation.
5️⃣ To verify debtors, check confirmation from debtors.
6️⃣ To verify creditors, check confirmation from creditors.
7️⃣ To verify bank loan, check loan agreement.
8️⃣ To check bank balance, check bank statement, or bank reconciliation statement.
📌 Premium Resource 1: Generative AI
➡️ Generative AI is different from Search Engine because it creates content (instead of finding content).
➡️ I prefer to use ChatGPT over ~Gemini~ or ~Copilot~.
➡️ Currently, Generative AI can generate four types of content i.e. Text, Image, Audio, Video. For students, learning Text Generation is sufficient.
📌Following are some essential rules of Prompt Engineering [based on latest best practices]:
1️⃣ Use short sentences.
2️⃣ Add role in prompt [e.g. as auditor, as accountant, as lawyer, as tax consultant].
3️⃣ Use “Grader 4 Rule”. [e.g. write at end “explain this concept to Grade 4 student]
4️⃣ You can restructure the content e.g. you can ask to Shorten, Convert into Table or Bullets.
💎[Remember, good prompt will produce good result. Bad prompt will produce bad result].💎
📌 Premium Resource 2: Menti Live Challenge
➡️ Participate in Positive Competition. Beat others and win prizes.
📌 Premium Resource 3: Golden Statements
➡️ Shared via Whatsapp. Ensure you did not miss even a single concept in class.
👉 Some Rules on “How to Attempt Paper:
1️⃣Judge whether it is a question of reproduction or case study.
2️⃣Check marks of the question.
3️⃣ Read Requirement of the question, and allocate marks to different parts of the question on the basis of your judgment.
4️⃣ Read complete question and underline Power/Key Words.
📌 Your solution for concept review questions may exactly match with suggested solutions, but your solution for Case Studies will NEVER match with suggested solutions (nor it should be, because case studies are based on judgments).
Remember the following rule by ICAP Examination Department:
🦋 Concepts should be same, Words may not be. 🦋
Sales invoices Sales entry procedure
https://drive.google.com/file/d/1mkrlQexNG-Yk9BsiGhYItnDebQLbc7zT/view?usp=drivesdk
Purchase entry Purchase invoice
https://drive.google.com/file/d/1n1wJ1kuadb0CHB2V7NmW6WqRdMXctMjR/view?usp=drivesdk
Internal control system
https://drive.google.com/file/d/1nOFlYvJONir9pBQuGHvuC0Tg4Mtjhxlo/view?usp=drivesdk
https://drive.google.com/file/d/1nULlOsfYiUFJ8HHp2TgRi5pRCpMNVbP6/view?usp=drivesdk
Golden statement lectures 2
✨ Golden Statements From Audit - Lecture # 2: ✨
📌 Features of Joint Stock Company as compared with Sole-proprietor and Partnership:
1. Shareholders and Management are different persons.
2. Shareholders want True and Fair View of F/S. Management tries to show “Best View” of F/S. Best View is achieved by Overstating Income/Assets, and by Understating Expenses/Liabilities.
3. This conflict is resolved by appointing an independent expert person called “Auditor”.
📌 Relationship between Shareholders and Directors/Management:
Steward — > Directors manage shareholders’ assets.
Agent — > Directors act in accordance with instructions of Shareholders.
Accountable — > Directors are accountable to shareholders, and they prepare Financial Statements.
📌 Responsibility of Management is to prepare F/S, and of Auditor is to verify F/S.
📌 Auditor must be Independent.
📌 Audit Report can be either 1️⃣ Unmodified or 2️⃣ Modified. Unmodified Report means auditor writes in report that *Financial Statements give true and fair view *.
📌 An Audit has many advantages e.g. it identifies most of the misstatements in F/S, and weaknesses in Internal System.
Difference between Internal Control System and Financial Statements
Internal Control means steps/rules/procedures by management to prepare Financial Statements.
📌 Good Efforts by management (i.e. strong internal controls) means Less risk of misstatement in financial statements. Auditor performs Less Procedures in this situation.
📌 Bad Efforts by management (i.e. weak internal controls) means More Risk of misstatement in financial statements. Auditor performs More Procedures in this situation.
📌 Audit report (on F/S) is given to Shareholders which includes Uncorrected Misstatements (if identified). Management Letter (on Internal Control System) is given to Management which includes Weaknesses in Internal Controls (if identified).
Difference between “Risk of Misstatement” and “Misstatement”:
📌 Risk means possibility, not certainty. If there is risk of misstatement, it means there is chance that misstatement may occur. But if there is misstatement, it means misstatement has occurred/confirmed.
Some examples of misstatements include:
1. Depreciation is not recorded in financial statements..
2. Provision for bad debts is not recorded in financial statements.
3. Inventory is not recorded at lower of cost and NRV.
👉 Do NOT forget Home Assignment✍
Three party relationships
Shareholders
Management / directors
Auditor
https://drive.google.com/file/d/1nUlLT2fkShEt9yjrZhSivt2rEyZtLE4h/view?usp=drivesdk
Statutory requirements
Required by law
Assurance engagement
https://drive.google.com/file/d/1q0Pvr7TlGek015yLRxFleAH8tt6bJ0oY/view?usp=drivesdk
Practitioner (auditor)
Subject matter (FS)
https://drive.google.com/file/d/1nkCJC-7mEmnPbJBzCxeMNv6E8jVnkYT5/view?usp=drivesdk
Limited
(moderate/
negative)
Assurance
75% Assurance
Expressed in negative confirmation
Moderate level of confirmation
Based
Based on our review nothing has come to our attention that causes us to believe that financial statement does not give true and fear view.
Reasonable
(High/positive)
Assurance
95%
It is high but not absolute
Assurance
It is expressed in positive confirmation
https://drive.google.com/file/d/1qmtbc7eiyyvtZczvS729wqYdbcvg06bT/view?usp=drivesdk
https://drive.google.com/file/d/1qgrFRU7RTW5LitcCH8f_ccCQP-rcPf94/view?usp=drivesdk
Absolute Assurance
https://drive.google.com/file/d/1qqlTkR7MDE9uO0GLONjow4wh5_Xh9B9t/view?usp=drivesdk
https://drive.google.com/file/d/1qqtpx__IIok1pAIHsnlk_qpaLa6CErh5/view?usp=drivesdk
https://drive.google.com/file/d/1qtMZ5u7URlUIlyZTPRmRpDXltzvSZmpZ/view?usp=drivesdk
https://drive.google.com/file/d/1r2aPIGUsxzalK6NlH3Fy_X4YnXEXVDfX/view?usp=drivesdk
https://drive.google.com/file/d/1qyDoaEYnA1CoFrRIPM_TKdKPG2_Peoks/view?usp=drivesdk
https://drive.google.com/file/d/1r5c8zcydAsGLWYXKJEYxvEj1utxSDnuj/view?usp=drivesdk
https://drive.google.com/file/d/1rUAzH3Sgwovdtbcd5nbN1mr784FLXyFk/view?usp=drivesdk
https://drive.google.com/file/d/1rfoMx_Wn-k1zLsDjK_fjoR7Fxu6eCFXG/view?usp=drivesdk
https://drive.google.com/file/d/1rn90C5Zz9fYCQ4BWEHDJwYuMtaSBzPIN/view?usp=drivesdk
Complete set of Financial Statements
Balance sheet
Income statement
Statement of changes in equity
Cash flow statement
Notes to FS
https://drive.google.com/file/d/1tvnpkFAeVmNwCjD_PNZ8hABk7xsGy__f/view?usp=drivesdk
What is meant by true and fair view
https://drive.google.com/file/d/1sHdGAJICQAAb2EwMplIcXN1dFIA6vIHL/view?usp=drivesdk
https://drive.google.com/file/d/1sNF7wr8pxClw4sHvx7UOYjj-EfjAbds5/view?usp=drivesdk
https://drive.google.com/file/d/1saD-WE0GuZ6-M5wF0I0yD5VPAvTuWN1T/view?usp=drivesdk
Lecture 7 -19:38
https://drive.google.com/file/d/1u02JzNdIFh6jLaR10CykVkjMIWwQKVAs/view?usp=drivesdk
Financial statement framework
General purpose (for wide range of users / general public)
Special purpose
(For specific users)
https://drive.google.com/file/d/1siGxX-GT1VaTmySZw2WSIiIQfpcuEw3j/view?usp=drivesdk
https://drive.google.com/file/d/1skznhZEsKi5FJHLVO5K29B2x0WQcpedK/view?usp=drivesdk
https://drive.google.com/file/d/1tADsBWnD5npnFtyMXxVpH4LOtYP_arq6/view?usp=drivesdk
https://drive.google.com/file/d/1tAVUr0Nb2FW8fdnYrov73D8jGUCLIflz/view?usp=drivesdk
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