Scribd
Upload
9 views17 pages

Introduction To Auditing and Overview of The Audit 1

The document provides an overview of the auditing process and its key elements: 1) Auditing involves systematically obtaining and evaluating evidence to determine if financial statement assertions align with established criteria and communicating the results. 2) The audit process includes preparing financial statements, performing audit procedures to obtain evidence, and expressing an opinion. 3) Key aspects of a financial statement audit are assessing risks, testing controls, obtaining sufficient evidence, and determining the appropriate audit report.

Uploaded by

ogayon.annamarie
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
9 views17 pages

Introduction To Auditing and Overview of The Audit 1

The document provides an overview of the auditing process and its key elements: 1) Auditing involves systematically obtaining and evaluating evidence to determine if financial statement assertions align with established criteria and communicating the results. 2) The audit process includes preparing financial statements, performing audit procedures to obtain evidence, and expressing an opinion. 3) Key aspects of a financial statement audit are assessing risks, testing controls, obtaining sufficient evidence, and determining the appropriate audit report.

Uploaded by

ogayon.annamarie
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 17

INTRODUCTION

TO AUDITING
AND OVERVIEW
OF THE AUDIT
PROCESS
Is a structured process that :
a. Involves the application of analytical
skills, professional judgement and
professional skepticism;
b. Is usually performed by a team of
AUDITING professionals, directed with
managerial skills;
c. Complies with all relevant technical
standards; and
d. Complies with required standards of
professional ethics.
AUDIT
• systematic process of objectively obtaining and evaluating
evidence regarding assertions about economic actions and
events to ascertain the degree of correspondence between
these assertions and established criteria and
communicating the results thereof.
Types of Audit
The Entity and its Objectives

Reliable Effective and


Financial Laws and
Efficient
Reports Regulations
Operations

Audit

Subject
F/s Operations Compliance
matters

External Auditor Governmental External Auditor


Auditors Auditor, Internal
and and
Governmental Auditor, External Governmental
Auditor Auditor Auditor
Overall Objectives:
• Expression of an opinion
• Financial statements are taken
FINANCIAL as a whole
STATEMEN • Reasonable assurance
T AUDIT • In all material respects
• Presence of criteria
• Communication of the results
A.A three-party relationship
B.An appropriate subject matter
C.Suitable Criteria
Review of D.Sufficient appropriate evidence
elements of E.A written assurance report or conclusion
To warrant the issuance of an
F/S Audit unmodified opinion the auditor determines
whether there is
a. a limitation on the scope
b. a disagreement with management
Assurance provided by the auditor
“High but not absolute”
Reasonable assurance and the inherent limitations of an audit
A. Use of selective testing
B. Inherent limitations of internal control
C. Fact that most of audit evidence is persuasive rather than
conclusive
D. Work undertaken by the auditor to form opinion is permeated by
judgement
E. Nature/characteristics of assertions
A. Management of the following
1. Business risk - any event that will prevent the
entity in meeting its objectives such as wealth
and profit maximization
2. Information risk – risk that the information
prepared and presented by the entity contains
The Demand misstatements

for F/S Audit B. Additional conditions creating the need for F/S
Audit
3. Conflict of interest
4. Expertise
5. Remoteness of users
6. Financial Consequence
Value of F/S Audit
• Audit reduces information
risk that may lead to lower
cost of capital
• Audit may be used to deter
insufficiency and fraud
COMPLY WITH CONDUCT AN AUDIT PLAN AND PERFORM
RELEVANT ETHICAL IN ACCORDANCE THE AUDIT WITH AN
REQUIREMENTS WITH PSA ATTITUDE OF
General PROFESSIONAL
SKEPTICISM

Principles of
an FS Audit
EXERCISE OBTAIN SUFFICIENT
PROFESSIONAL APPROPRIATE AUDIT
JUDGEMENT EVIDENCE
Theoretical 1. All financial data are verifiable through
supporting documents and records
Framework of FS 2. Auditor should always maintain
Audit independence
3. No long-term conflict
4. Audit benefits the public
5. Effective internal control system
6. Consistent application of GAAP
7. What was held true in the past, shall
continue to be held true in the future in
the absence of any evidence to the
contrary.
AUDIT PROCESS
1. ENTITY PREPARES AND PRESENT FINANCIAL
STATEMENTS
A. Transaction and events and related B. Account balances and related
disclosure disclosures
Occurrence Completeness
Completeness Existence
Cutoff Rights and Obligations
Accuracy Accuracy, Validation and
Presentation Allocation
Classification
AUDIT PROCESS

2. THE AUDITOR PERFORM AUDIT PROCEDURES


Major Audit Procedures
1. Risk assessment procedures
2. Test of Controls
3. Substantive procedures
i. Test of details
II. Substantive analytical procedures
Specific audit procedures
1. Inspection of Records or Documents
2. Inspection of Tangible Assets
3. Observation
4. Inquiry
5. Confirmation
6. Recalculation
7. Reperformance
8. Analytical Procedures
AUDIT PROCESS
3. THE AUDITORS GATHERS AUDIT EVIDENCE
4. THE AUDITORS EXPRESSES AN AUDIT OPINION
a. Unmodified Opinion
b. Modified Opinion
1. Qualified and Adverse
2. Qualified and Disclaimer of opinion
Audit Process: A more detailed approach

Preliminary Planning an audit of Study and


engagement Financial evaluation of Evidence gathering
activities Statements Internal Control

Completing the Issuance of the Post audit


audit audit report responsibilities

You might also like