Week 1 Flashcards
Objective of Auditing
Verification of Information
“The objective of a financial statement audit is for the auditor to express an opinion about whether the financial statements are prepared in all material respects in accordance with a financial reporting framework.”
Objective of F/S Audits
Causes of Information Risk
We are drowning in data Remoteness of information Complex exchange transactions Competing incentives Reliability Voluminous data
Different Assurance Services
Financial Statement
Different Assurance Services: Financial Statement
Planning / Execution / Report
Sufficient & appropriate evidence; then unmodified opinion
Limitations
Different Assurance Services:
Compliance
Are the applicable rules, policies, procedures are being followed
Ex.: tax legislation, company hiring practices
Different Assurance Services: Operational
How well is the entity operating
Also known as: value for money, performance or efficiency audits Ex.: provincial auditor general
Different Assurance Services: Internal
Vary widely; usually elements of governance process
Purpose determined by those charge with governance
Own profession
Corporate social responsibility (CSR)
Include environmental, employee and social
Voluntary
Ex. Carbon emissions information
Different Levels of Assurance
Reasonable
Moderate
None
Different Levels of Assurance: Reasonable
High but not absolute
Ex. External audit of a financial statement
Different Levels of Assurance: Moderate
Negative assurance – “nothing came to our attention”
Ex. Review engagement
Different Levels of Assurance: None
Complete a set of tasks & report factually on the results
Ex. Compilation Engagement
Responsibilities of Accountant (Preparer)
Information included in their financial statements are: Relevant Reliable Comparable Understandable Fair presentation
Responsibilities of Auditor
Will form their opinion using:
Professional scepticism
Professional judgement
Due Care
