Audit Notes

Chapter 1 – The demand for an Auditing and Assurance Profession
Key Services for Public Accounting Firms
Audits  High Assurance (95% - 99%)
Reviews  Moderate Assurance (60% - 70%)
Compilation  Low to No Assurance (0% - 10%)
Assurance Engagements (Triangle diagram based on the subject matter at hand)
Practitioner (Auditor)  Users  Accountable Party (Management)

Practitioners give the Users a written conclusion
Accountable party must have an accountability relationship with the Users

Auditors in an engagement must be independent because they would be perceived as unbiased

Definitions:
Accounting  Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information to have a proper decision making process

Assurance  An engagement where a practitioner is engaged to issue a written communication expressing a conclusion concerning a subject matter for which the accountable party is responsible

Auditing  Accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria (GAAS, IFRS, ASPE). Auditing should be done by a competent, independent person.

Audit of F/S (Triangle diagram based on the conformity of the F/S with IFRS, GAAS, ASPE)

Auditor  Shareholder’s Management

Auditor gives their written opinion to the Shareholders
Management gives a stewardship relationship (to manage and look after the company for the S/H) with the shareholders

Audit Objectives

To gain reasonable assurance of F/S
To ensure F/S are free from material misstatements
For the auditor to express an opinion about the F/S being prepared with respects to the financial reporting frameworks (IFRS, ASPE)

Chapter 2 – The Public Accounting Profession

Quality Control for Firms (Table 2.2. p 39)

Leadership for Quality Control
Should be present for all audits
Quality control