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Module 1.2 Introduction To Auditing

This document provides an overview of auditing standards and concepts. It discusses the following: 1. Generally Accepted Auditing Standards (GAAS) which are comprised of general standards, standards of fieldwork, and standards of reporting. 2. The nature, scope, limitations, philosophy and objectives of auditing. The objective is for the auditor to express an opinion on whether the financial statements are prepared in accordance with the financial reporting framework. 3. The different types of audits - financial statement audits, internal/operational audits, and governmental audits. 4. Risk-based auditing procedures include inquiries of management, analytical procedures, and observation and inspection to obtain an understanding of

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Mary Grace Dela Cruz
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248 views

Module 1.2 Introduction To Auditing

This document provides an overview of auditing standards and concepts. It discusses the following: 1. Generally Accepted Auditing Standards (GAAS) which are comprised of general standards, standards of fieldwork, and standards of reporting. 2. The nature, scope, limitations, philosophy and objectives of auditing. The objective is for the auditor to express an opinion on whether the financial statements are prepared in accordance with the financial reporting framework. 3. The different types of audits - financial statement audits, internal/operational audits, and governmental audits. 4. Risk-based auditing procedures include inquiries of management, analytical procedures, and observation and inspection to obtain an understanding of

Uploaded by

Mary Grace Dela Cruz
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Module 1.

2 : INTRODUCTION
TO AUDITING
Prof. Mary Grace Dela Cruz, CPA
1. Generally Accepted Auditing Standards
(GAAS)
 General standards
1. The examination is to be performed by a person or persons
having adequate technical training and proficiency as an
auditor.
2. In all matters relating to the assignment, an independence
in mental attitude is to be maintained by the auditor or
auditors.
3. Due professional care is to be exercised in the performance
of the examination and the preparation of the report.
1. Generally Accepted Auditing Standards
(GAAS)
 Standards of Fieldwork
1. The work is to be adequately planned, and assistants, if any, are to
be properly supervised.
2. There is to be a proper study and evaluation of the existing
internal control as a basis for reliance thereon and for the
determination of the resultant extent of the tests to which auditing
procedures are to be restricted.
3. Sufficient, competent evidential matter is to be obtained through
inspection, observation, inquiries, and confirmations to afford a
reasonable basis for an opinion regarding the financial statements
under examination.
1. Generally Accepted Auditing Standards
(GAAS)
 Standards of Reporting
1. The report shall state whether the financial statements are presented in accordance with
generally accepted principles of accounting.
2. The report shall identify those circumstances in which principles have not been consistently
observed in the current period in relation to the preceding period.
3. Informative disclosures are to be regarded as reasonably adequate unless otherwise stated in
the report.
4. The report shall either contain an expression of opinion regarding the financial statements,
taken as a whole, or an assertion to the effect that an opinion cannot be expressed. When an
overall opinion cannot be expressed, the reasons therefor should be stated. In all cases where
an auditor’s name is associated with financial statements, the report should contain a clear-cut
indication of the character of the auditor’s examination, if any, and the degree of responsibility
the auditor is taking.
Professional Judgment

 The application of relevant training, knowledge


and experience, within the context provided by
auditing, accounting and ethical standards, in
making informed decisions about the courses of
action that are appropriate in the circumstances of
the audit engagement.
 The auditor shall exercise professional
judgment in planning and performing an
audit of financial statements.
2. Nature, scope, limitations, philosophy and
objectives
2. Nature, scope, limitations, philosophy and
objectives
2. OBJECTIVE OF AUDIT (PSA 200)

 The objective of an audit of financial statements is to enable the auditor to


express an opinion whether the financial statements are prepared, in all
material respects, in accordance with an identified financial reporting
framework. The phrase used to express the auditor’s opinion is “present
fairly, in all material respects.”
 Although the auditor’s opinion enhances the credibility of the financial
statements, the user cannot assume that the opinion is an assurance as
to the future viability of the entity nor the efficiency or effectiveness
with which management has conducted the affairs of the entity.
2. SCOPE OF AUDIT (PSA 200)

 The term “scope of an audit” refers to the audit procedures deemed


necessary in the circumstances to achieve the objective of the audit.
 The procedures required to conduct an audit in accordance with PSAs
should be determined by the auditor having regard to the requirements of
PSAs, relevant professional bodies, legislation, regulations and, where
appropriate, the terms of the audit engagement and reporting
requirements.
3. TYPES OF AUDIT
1. Financial Statement/Independent Auditing
 The purpose of an audit is to enhance the degree of confidence
of intended users in the financial statements. This is achieved by
the expression of an opinion by the auditor on whether the
financial statements are prepared, in all material respects, in
accordance with an applicable financial reporting framework.
2. Internal/Operational Auditing
 It is an appraisal activity established within an entity as a service
to the entity. Its functions include, amongst other things,
examining, evaluating and monitoring the adequacy and
effectiveness of the accounting and internal control systems.
3. Governmental Auditing
 It is typically designed to determine whether the auditee has
complied with applicable laws and regulations. Conducted by COA
– financial audit and performance audit (economy, efficiency and
program audits).
4. Risk-based auditing (PSA 315)
The auditor should perform the following risk assessment
procedures to obtain an understanding of the entity and its
environment, including its internal control:

1. Inquiries of management and others within the entity;


2. Analytical procedures; and
3. Observation and inspection.
Q&A
Prof. Mary Grace Dela Cruz, CPA
Thank You
Prof. Mary Grace Dela Cruz, CPA

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