Professional Documents
Culture Documents
Auditors will form an opinion on financial statements Auditors opinion enhancers users confidence in Financial Statements Auditors are paid to do an Audit To Avoid been sued Management Assertions/Financial Statement Assertions
Is the set of information that the preparer of Financial Statements (Management) is providing to another party. Financial statements represent a very complex and interrelated set of assertions. At the most aggregate level, the financial statements include broad assertions such as "total liabilities as at 31 December are $50 million", "total revenue for the year is $9 million" and "net income for the year is $3 million".
Accounts
Rights & Obligations Completeness Valuation & Allocation Classification and Understandability
Quality of Evidence
Reliable
Relevant
Source Independent/external/internal Effectiveness of internal controls Medium document/original/copy/oral How directly to auditor Qualifications of provider Knowledge of Business
Audit Procedures
1.1. Inspection of Records 2. Confirmation 3. Analytical procedures
4. Enquiries
5. Recalculation
6. Re performance
7. Observation 8. Physical Examination
Confirmation
Information
Cash in bank Accounts receivable Accounts payable
Source
Bank Customer Creditor
The receipt of a written or oral response from an independent third party. Auditor has client request that the third party respond directly to the auditor.
Analytical Procedures As Part of the Planning Process At the Final Review Stage
Audits studies relationships among data. Unusual fluctuations occur when significant difference are not expected but do exist or when significant differences are expected but do not exist. Required during the planning and completion phases on all audits.
Enquiries
It is the obtaining of written or oral information from the client in response to questions from the auditor.
Re Calculation
It involves rechecking a sample of calculations made by the client.
Re-Performance
It is the auditors independent tests of client accounting procedures or controls that were originally done. i.e. test Checking inventory count, IT tools to check debtors ageing
Observation
Auditor witnesses the physical activities of the client
Working Papers
Audit documentation is the principal record of auditing procedures applied, evidence obtained, and conclusions reached by the auditor in the engagement.
Permanent File
Current File
Information relevant for a given audit client for a particular audit year.
Ownership and access to the working papers are with the auditor. Storage Should be kept for minimum of at least 5years.SOX -7
Types of Files
Permanent Files - information with continuing relevance Information on client Chart of accounts Organization charts Contracts, agreements
Pension plans
Deferred tax and other schedules
Types of Files
Audit program
Time budget Working trial balance Lead schedules Detailed schedules
Working Papers
WORKING PAPERS
NATURE
PURPOSE
TYPES
1. 2.
3.
Principle support for auditors report Evidence that examination was made in accordance with GAAS Means for coordinating and supervising the examination
1. 2. 3.
4.
Working trial balance Schedules and analyses Audit memoranda and corroborating info Adjusting and reclassifying entries
Schedules prepared or obtained by the auditor Auditor memos Results of analytical procedures and tests of client records Auditor analysis of account balance