Summary
Summary Auditing 288
- Course
- Institution
- Book
The following summary covers the entire years work that was done in class. All prescribed chapters is are included: the notes, textbook and what extra notes from the lecturer.
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
planning phase- audit phase
-
planning phase in the audit
-
Auditing 288/388 Summary
1 review
By: eckojvr • 1 year ago
Seller
Follow
jessiwessels
Reviews received
Content preview
Chapter 1: IntroductionWhat is an Auditor?
Auditors are assurance givers. They express a conclusion designed to enhance the degree of confidence
of the intended user. They assure and attest to the truth of financial statements
Types of Auditors
External Auditors
- Express an independent opinion on the whether the financial statements fairly present the
financial position and results of a company.
- Not an employee of the company
Internal Auditors
- perform independent assignments on behalf of senior management.
- Enhances managements degree of confidence that internal systems are functioning properly
- Is an employee of the company
Government Auditors
- Evaluate and investigate financial affairs of government departments
- Auditor General, SARS
Forensic Auditors
- investigate and gather evidence where there has been alleged financial mismanagement,
theft, or fraud
Special Purpose Auditor
- specialize in specific fields
Characteristics of Auditors
Independence
Integrity
Objectivity
Professional competence and due care
Confidentiality
Professional behavior
The Need for Auditors
Split between ownership and management
Confidence in financial information
Accountability
Purpose of an Audit
To ensure the financial statements fairly present the financial position of the company in all material
aspects
Audit NOT meant to – detect fraud or guarantee continued existence of business
Auditor provides reasonable assurance that the financial statements are free of material error. Cannot
provide 100% guarantee because of following factors:
a. the use of testing (samples)
b. the inherent limitations of accounting and internal control systems
c. audit evidence is persuasive rather than conclusive
d. subjectivity in the financial statements and the auditor’s approach to the audit
e. timeliness of financial reporting and the balance between benefit and cost
,Definition of an Audit
An audit is a systematic approach of collecting and evaluating evidence and information objectively
pertaining to assertions made on economic actions and happenings by management to determine the
agreement to the criteria, and communicating the results to users
Types of Audits
1. Financial Statements Audit
Registered auditor collects information and evidence to pass an opinion whether financial
statements fairly present the financial position, financial performance and cash flow of company.
Distributed to shareholders, creditors, SARS, Public, Bank
2. Other
i. Assurance engagements reporting on whether operational activities comply with rules and
regulations. E.g., whether it complies with the companies act.
Assurance and Non-Assurance Engagements
Assurance Engagements
Provide a conclusion or opinion about information which enhances the level of
assurance of the users of the information
Non-assurance Engagements
No opinion or conclusion is expressed
A task is simply completed
Types of Services
Services differ according to:
nature of service
level of assurance
report provided
Audit services
- reasonable assurance
- free from material misstatement
Relates Services
- review
- agreed upon procedures
- compilation
(no assurance)
Accounting Bodies
IFAC – International Federation of Accountants
IAASB – International Auditing and Assurances Board
SAICA – South African Institute of Chartered Accountants
→ improve interests of CAs in SA
IRBA – International Regulatory Board of Auditors
→ Must register with IRBA to offer auditing services
Roles of parties concerned
Shareholders
- provide finance
- appoint directors
- appoint auditors
, - receive annual financial statements
Directors
- Management company and report results
Auditors
- provide independent opinion on whether directors’ reports to shareholders fairly present
the financial position and results of the company
, Chapter 1: Introduction
Audit Process
Overview of the audit process
1. Pre-engagement
Client investigation (new and existing)
Determine skills and competence requirements
Determine engagement terms and engagement letter (ISA 210)
2. Planning
Knowledge & understanding of the business (ISA 315)
Understanding of the accounting & internal control system
Risk evaluation (ISA 315)
• Inherent risk (IR)
(ISA 330)
• Control risik (CR)
• Auditor’s reaction on risk assessment (ISA 330)
Planning materiality (ISA 320)
Formulate audit approach
• Audit strategy (Scope, timing, direction Big picture)
• Audit approach (Substantive OR Combined Approach)
• Audit plan (List of audit procedures)
3. Gathering audit evidence
Audit approach
(Combination depends on audit approach)
• Test of Control (ToC)
• Substantive Procedures (SP)
• Evaluation and reporting (ISA 450)
Auditor’s response to risks (ISA 330)
Audit evidence (ISA 500)
Audit Sampling (ISA 530)
4. Evaluation and reporting (ISA 450)
Evaluate, conclude & report
• Overall review (audit differences)
• Conclusion
• Reporting
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller jessiwessels. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $14.54. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
57727 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now