Exam (elaborations)
AUE2601 Exam PACK 2023
- Course
- Institution
AUE2601 Exam PACK 2023
[Show more]
Seller
Follow
msmartie11
Reviews received
Content preview
AUE2601 EXAMPACK 2023
QUESTIONS &
ANSWERS
,AUE2601 EXAM PACK 2023
LATEST QUESTIONS
AND ANSWERS
, Page 1
1
11
st
Assignment 1 is compulsory and due 21 August 09 (study guide topics 1 – 4)
- counts towards final module mark
AUE2601
Aue2601
Assignment 2 is compulsory and due 25 th September 09 (study guide topic 5)
- counts towards final module mark
Detailed
Detailed
Summarised
summarisedNotes
notes
& past
&
Assignment 3 is NOT compulsory and doesn't count towards final mark – self assessment
papers (from pg
Past
104)
papers Exam = 2 hours, consisting of :
70% - questions at Level 1 (knowledge and comprehension)
30% - questions at Level 2 (application)
INTRODUCTION TO AUDITING THEORY & AUDIT PRACTICE
PART A – INTRODUCTION TO AUDITING THEORY
Study Topic 2 (text book pg 1/2)
2.1 The need for Auditing Services
Jackson & Stent Chapter 1
ISA 200 – Objectives and general principles governing an audit
ISA 610
International Framework for Assurance Engagements
External auditors – express an independent opinion if the AFS’s of a company fairly present the financial position and
results of the company’s operations. NOT an employee of the company. Basically enhances the degree of confidence
which users of the financial statements will have of the information they received from the financial statements.
Internal auditors – perform independent assignments on behalf of senior management of the company – normally to
evaluate the efficiency, economy and effectiveness of the company’s internal control systems and business activities.
Enhances management’s degree of confidence that the company’s systems are functioning as intended. Employee of
the company, but should be independent of the department, division or subsidiary which they are auditing.
Government auditors – evaluate and investigate the financial affairs of government departments and report their
findings to senior government therefore increasing the degree of confidence which they have in their departments.
Employee of the government, but must be independent of the government department they are auditing.
Forensic auditors – concentrate on investigating and gathering evidence where there has been alleged financial
mismanagement, theft or fraud. Work independent of the entity under investigation and increases the degree of
confidence the investigating body has in the evidence which is presented.
, Page 2
2
22
Special purpose auditors – specialise in a particular field such as environmental auditors and VAT auditors. Enhance
the confidence people have in the “correctness” of the information that is being presented.
MUST BE INDEPENDENT OF THE ENTITY BEING AUDITED.
Auditor required to observe the fundamental ethical principles of :
· integrity (straightforward, honest, moral)
· objectivity (impartial, fair, non-biased and non-prejudicial)
· professional competence and due care – maintaining professional knowledge and skill at the required level and
performing work diligently
· professional behavior – comply with laws and regulations and avoid action which discredits the profession
· confidentiality – respecting the confidentiality of client information.
Financial reporting system is the entire process by which the management of a business entity compiles and
discloses financial information concerning their financial position and the results of the entity’s operations.
All this information is communicated to external parties in the entities financial statement at the end of each accounting
period and the financial reporting process must address the needs of users of the financial information (investors,
lenders, suppliers and employees). Information must be understandable, relevant, and reliable and prepared on a basis
that is comparable with that used by other business entities.
Objective of financial statements = to provide information about the financial position, performance and changes in
financial position of an enterprise that is useful to a wide range of users in making economic decisions. (From the
conceptual accounting framework in the International Standard – IAS).
Auditing vs. accounting :
Management responsibility to prepare the financial statements in accordance to International Financial Reporting
Standards (IFRS’s) and also to :
· maintain an appropriate accounting system and
· design and implement adequate internal controls to ensure the reliability and integrity of the accounting system
Accounting = the series of tasks and records of an entity by which transactions are processed as a means of
maintaining financial records.
Auditing = examining audit evidence to find sufficient evidential matter to support the comments of
management contained in the financial statements, in order to express an opinion in the auditor’s report as to
whether or not the financial statements fairly present the affairs of the entity in accordance with International
Financial Reporting Standards and the relevant statutory requirements.
AUDITOR THEREFORE EXPRESSES AN OPINION ON MANAGEMENT’S FINANCIAL STATEMENTS.
Engagement of auditing can either be because of statutory requirements (e.g. companies) or on a voluntary basis :
Statutory audits – audits required in terms of an Act – e.g. Companies Act which state that all companies must be
audited on an annual basis. These acts normally spell out the statutory duties and responsibilities of the auditor.
Non-statutory audits – audits that are requested by clients but are not obligatory in terms of legislation – e.g. if
member wants audit of a CC.
Either engaged for :
Audits – auditing engagements
Related services – review engagements or engagements where agreed-upon procedures are carried out and
compilation engagements.
Objective of :
Audit engagement – to enable the auditor to express an opinion as to whether the financials statement are prepared
(in all material respects) in accordance with an applicable financial reporting framework
Review engagement – to enable the auditor to state whether or not anything has come to the auditor's attention that
causes the auditor to believe that the financial statements are not prepared (in all material respects) in accordance with
an identified financial reporting framework. A review engagement is conducted on the basis of procedures that do not
provide all the evidence that would be required in an audit.
Agreed-upon-procedures engagement – for the auditor to carry out procedures of an audit nature to which the auditor
and the entity and any appropriate 3 rd parties have agreed and to report on the factual findings
Compilation engagement – to use accounting expertise as opposed to auditing expertise to collect, classify and
summarise financial information.
OBJECTIVE OF A FINANCIAL AUDIT (AUDIT OF FINANCIAL STATEMENTS) – to provide users of the financial
statements of companies with a high degree of assurance about the creditability of the assertions made by the
management of the company in its financial statements. The assurance is in the form of an expression of an
opinion in the auditor’s report as to whether or not the financial statements are a fair presentation of the
company’s operating activities.
The determination of fair presentation relates to the financial statements taken as a whole. Fair presentation is
determined based on the auditor reporting on the information on the financial position (balance sheet), performance
(income statement) and any changes in the financial position of the company (cash flow statement).
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 msmartie11. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
64438 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now