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Ateneo de Naga University 1 Semester, AY 2016 - 2017

The document discusses key concepts related to auditing. It defines an audit as an objective evaluation of evidence to determine if assertions align with criteria. The purpose is to enhance confidence in financial statements. An auditor expresses an opinion on whether statements fairly represent the financial position in accordance with the reporting framework. Risks include inherent limitations and use of judgements.

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Kyrt Rholyn Santiago Apostol
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67 views

Ateneo de Naga University 1 Semester, AY 2016 - 2017

The document discusses key concepts related to auditing. It defines an audit as an objective evaluation of evidence to determine if assertions align with criteria. The purpose is to enhance confidence in financial statements. An auditor expresses an opinion on whether statements fairly represent the financial position in accordance with the reporting framework. Risks include inherent limitations and use of judgements.

Uploaded by

Kyrt Rholyn Santiago Apostol
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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ATENEO DE NAGA UNIVERSITY

1st Semester, AY 2016 - 2017


 Is a systematic process of objectively obtaining and
evaluating evidence regarding assertions about economic
actions and events to ascertain the degree of
correspondence between the assertions and established
criteria and communicating the results to interested users.
 Financial Statement Audits
 Operational Audits
 Compliance Audit
External Auditors
Internal Auditors
Government Auditors
ATENEO DE NAGA UNIVERSITY
1st Semester, AY 2016 - 2017
 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. In the
case of most general purpose frameworks, that opinion is
on whether the financial statements are presented fairly, in
all material respects, or give a true and fair view in
accordance with the framework.
reasonable assurance about whether the financial statements as a
 To obtain
whole are free from material misstatement, whether due to fraud
or error, thereby enabling the auditor to express an opinion on
whether the financial statements are prepared, in all material respects, in
accordance with an applicable financial reporting framework.
 To report on the financial statements, and communicate as required by the ISAs, in
accordance with the auditor’s findings.
 In the context of an audit of financial statements, a high, but not absolute, level
of assurance.
 Inherent Limitations:
1. Use of selective testing
2. Inherent limitations of internal control
3. Evidence available to the practitioner is persuasive rather than conclusive
4. Use of professional judgement
5. Characteristics of the underlying subject matter when measured or evaluated
against criteria.
A difference between the amount, classification, presentation, or disclosure of
a reported financial statement item and the amount, classification, presentation, or
disclosure that is required for the item to be in accordance with the applicable
financial reporting framework.

 Misstatements can arise from error or fraud.


 The financial reporting framework adopted by management and,
where appropriate, those charged with governance in the
preparation of the financial statements that is acceptable in view of
the nature of the entity and the objective of the financial statements,
or that is required by law or regulation.
 OTHER SOURCES:
 Legal and ethical environment
 Published accounting interpretations
 Published views of varying authority
 General and industry practices
 Accounting Literature
 the preparation and fair presentation of the financial statements in
accordance with the applicable financial reporting framework.
 the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; and
 To provide the auditor with
 Access to all information of which management and, when appropriate, those charged
with governance are aware that is relevant to the preparation and fair presentation of the
financial statements, such as records, documentation, and other matters;
 Additional information that the auditor may request from management and, when
appropriate, those charged with governance for the purpose of the audit; and
 Unrestricted access to persons within the entity from whom the auditor determines it
necessary to obtain audit evidence.
 Ethical Requirements
 Professional Skepticism
 Professional Judgment
 Sufficient Appropriate Audit Evidence and Audit Risk
 Conduct of an Audit in Accordance with ISA.
 Unconditional Requirements
 Auditor is required to comply in all cases. – “MUST”
 Presumptively mandatory requirements
 Auditor is required to comply. However in rare cases, the auditor may depart from a presumptively
mandatory requirement. – “SHOULD”
 Audit risk is a function of the risks of material misstatement
and detection risk.
Audit Risk = Risk of Material Misstatement * Detection Risk
 Risk of Material Misstatement
 Inherent Risk
 Control Risk

 The assessment of the risks of material misstatement may be expressed in


quantitative terms, such as in percentages, or in non-quantitative terms.
 The nature of financial reporting;
 The nature of audit procedures
 The need for the audit to be conducted within a reasonable period of time and at a
reasonable cost.

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