Audit

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Audit

  1. 1. 1 An Introduction to Auditing Auditing and Assurance Services: Understanding the Integrated Audit
  2. 2. JOIN KHALID AZIZ• INTER COMMERCE 1ST YEAR 2ND YEAR ACCOUNTING,BUSINESS MATHS STATISTICS ECONOMICS BANKING B.COM CRASH classes PART 1 ACCOUNTING, ECONOMICS & STATISTICS . PART 2 ADVANCED ACCOUNTING O LEVELS ACCOUNTS, ECONOMICS, BUSINESS STUDIES, PAKISTAN STUDIES & URDU. ICMAP STAGE 1,2,3,4 PIPFA ICAP MODULE B & D CAT T1-T8 ACCA F1,F2,F3,F5,F8,P1,P7 MA-ECONOMICS 100 % RESULT IN 2011 KHALID AZIZ 0322-3385752 R1173, ALNOOR SOCIETY, BLOCK 19, POWER HOUSE, F.B.AREA, KARACHI.
  3. 3. Chapter 13 An Introduction to Auditing Prepared by Richard J. Campbell
  4. 4. Learning Objectives4 1. Recognize an integrated audit and a financial statement audit report. 2. Describe the overall purpose and value of an audit, and identify the differences among an integrated audit, and audit of internal control, an audit of internal control over financial reporting, and a financial statement audit. 3. Define and contrast the responsibilities and expectations of different parties affected by the audit. 4. Learn the roles and interaction of the governing and standard- setting bodies and other entities that affect auditing. 5. Understand the link between independent auditors and accountants who provide other professional services.
  5. 5. Important Basics of Auditing5 • Financial statement audit • Audit of ICFR • Integrated audit • What it means when an auditor issues an “unqualified” or “clean” audit report on ICFR and the financial statements
  6. 6. An Integrated Audit6 Exhibit 1-1
  7. 7. A Definition of Auditing Auditing is a systematic process of7 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 to interested users. American Accounting Association, Committee on Basic Auditing Concepts, A Statement of Basic Auditing Concepts
  8. 8. Difference in Accountants and Auditors8 • To be an accountant, it is necessary to have accounting knowledge. – Understand business transactions – Know what information to capture – Know controls needed for activity and information – Be able to report it for various purposes – Be able to record it according to accounting standards • To be an auditor, it is also it is necessary to know audit processes and audit reporting
  9. 9. Roles of Auditors and Management9 By giving an opinion on financial statement fairness and ICFR effectiveness the auditor is indirectly reporting on management’s assertions.
  10. 10. The Auditing Process10 • Management produces financial statements and ICFR report • Auditor gathers and evaluates evidence – Many forms of evidence; anything the auditor uses • Auditor uses established standards to compare evidence to the financial statements and ICFR report – Looks for correspondence between what is presented and the underlying evidence – Uses processes described/required in auditing standards.
  11. 11. Beneficiaries of Audits Exhibit 1-311
  12. 12. Value of an Audit • To society: capital markets benefit12 • To owners and prospective owners: remote ownership, complex transactions, investment decisions • To corporate governance, the Board of Directors and audit committee: representing shareholders’ interests • To management – running the company with good information – cost of and access to capital – operating efficiency and effectiveness – credibility of performance indicators – properly accounting for complex transactions
  13. 13. Value of an Audit13 • Constituents: society, owners and prospective owners, corporate governance, management • All of these constituents need good information. Even nonpublic companies elect to have audits, although they are not required to do so by any law or regulation.
  14. 14. Other Audit Related Services14 • Internal Auditing • Operational Auditing • Forensic Accounting • General Accountability Office
  15. 15. Value of Audit Knowledge for Non- Auditors15 In other words, why is this course required at most universities for all accounting majors? • Understand purpose of auditor’s activities • Increase efficiency of interface with auditor • Enhanced communication • Implementation of ICFR
  16. 16. Appendix A- Working in a CA Firm16 Types of Audit Services: – Integrated audits for larger public companies – Financial statement audits for non- accelerated filer public and non-public companies – Reviews of interim financial statements for public companies – Reviews and compilations for non- public companies
  17. 17. Other Types of CA-Provided Services17 –Attest engagements –Assurance engagements –Tax engagements –Accounting and bookkeeping –Business advising/management consulting
  18. 18. CA Services, “Assurance” and “Nonassurance”18 Exhibit A-1 – CA Services
  19. 19. Common Firm Structures19 • Sole proprietorship • Professional corporation • General partnership • Limited liability company • Limited liability partnership
  20. 20. Firm Sizes20 • Big Four • International networks; national • Regional; large local • Small local
  21. 21. Common Auditor Position Titles21 • Partner/Owner • Manager • In Charge Accountant • Staff Accountant

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