Audit Midterm Conspect
Ethical (General) Standards
Competence – adequate technical training and proficiency. Competence is knowing what to do.
1. Recognize the assertion being made by management in each element (account) of a financial statement.
2. Decide which evidence is relevant for supporting or refusing the assertion
3. Select and perform procedures of obtaining the evidence
4. Evaluate the evidence and decide whether management assertions correspond to reality and GAAP
- Objectivity – an objective state of mind – intellectual honesty and impartiality. Having a lack of bias in designing and performing the audit work.
- Due professional care – observance of the rules of professional ethics and CAS. Doing the work to the best of your ability
Examination standards
- Planning and supervising
- Understanding the system on internal control of the business
- Design procedures to detect fraud
- Gather sufficient and appropriate (reliable and relevant) evidence/matter
1. Appropriate evidence are quantitative and qualitative
2. Objective and subjective
3. Absolutely compelling and mildly persuasive
- Express opinion
Reporting standards
- 6 paragraphs
- To shareholders
- Introductory, BS, IS, CF, RE, disclosures
- Management’s responsibilities
- Auditor’s responsibilities
- Scope paragraph
- Signature
- Date
- Address
Implicit messages
1. Consistency (the same accounting policy)
2. Adequate disclosure – if FSs disclosure contain all the important accounting information the user needs
Professional scepticism – auditor tends not to believe management without other evidence.
Before accepting the audit and signing the engagement letter
- Decide what type of assurance engagement to perform
- Obtain and review financial information about auditee
- Evaluate the auditor’s ability to comply with ethical requirements
-
Competence – adequate technical training and proficiency. Competence is knowing what to do.
1. Recognize the assertion being made by management in each element (account) of a financial statement.
2. Decide which evidence is relevant for supporting or refusing the assertion
3. Select and perform procedures of obtaining the evidence
4. Evaluate the evidence and decide whether management assertions correspond to reality and GAAP
- Objectivity – an objective state of mind – intellectual honesty and impartiality. Having a lack of bias in designing and performing the audit work.
- Due professional care – observance of the rules of professional ethics and CAS. Doing the work to the best of your ability
Examination standards
- Planning and supervising
- Understanding the system on internal control of the business
- Design procedures to detect fraud
- Gather sufficient and appropriate (reliable and relevant) evidence/matter
1. Appropriate evidence are quantitative and qualitative
2. Objective and subjective
3. Absolutely compelling and mildly persuasive
- Express opinion
Reporting standards
- 6 paragraphs
- To shareholders
- Introductory, BS, IS, CF, RE, disclosures
- Management’s responsibilities
- Auditor’s responsibilities
- Scope paragraph
- Signature
- Date
- Address
Implicit messages
1. Consistency (the same accounting policy)
2. Adequate disclosure – if FSs disclosure contain all the important accounting information the user needs
Professional scepticism – auditor tends not to believe management without other evidence.
Before accepting the audit and signing the engagement letter
- Decide what type of assurance engagement to perform
- Obtain and review financial information about auditee
- Evaluate the auditor’s ability to comply with ethical requirements
-