CH 1 Adv. Audit
CH 1 Adv. Audit
CH 1 Adv. Audit
AUDITING
&
ASSURANC
E
AcFn 631
CHAPTER ONE: THE DEMAND FOR AUDIT
AND OTHER ASSURANCE SERVICES
Nature of Auditing
Auditing is the accumulation and evaluation of evidence about
information to determine and report on the degree of
correspondence between the information and established
criteria.
Auditing should be done by a competent, independent person.
To do an audit, there must be information in a verifiable form
and some standards (criteria) by which the auditor can evaluate
the information.
For example: Quantifiable information: companies’ financial statements
and individuals’ federal income tax returns.
Subjective information: the effectiveness of computer
systems and the efficiency of manufacturing operations.
Cont…
The criteria for evaluating information might be
IFRS,
Internal Control Integrated Framework issued by the Committee of
Sponsoring Organizations (COSO),
Internal revenue code
For subjective information, it is more difficult to establish criteria.
Typically, auditors and the entities agree on the criteria well before