An exercise whose objective is to enable auditors to express an opinion on whether the financial statements give a true and fair view (or equivalent) of the entity’s affairs at the period end and of its profit or loss (or income and expenditure) for the period then ended and have been properly prepared in
accordance with the applicable reporting framework (e.g. relevant legislation and applicable accounting standards) or where statutory or other specific requirements prescribe the term, whether the financial statements “present fairly”.
An exercise whose objective is to enable auditors to express an opinion on whether the financial statements give a true and fair view (or equivalent) of the entity’s affairs at the period end and of its profit or loss (or income and expenditure) for the period then ended and have been properly prepared in
accordance with the applicable reporting framework (e.g. relevant legislation and applicable accounting standards) or where statutory or other specific requirements prescribe the term, whether the financial statements “present fairly”.
An internal audit is designed to review what a company is doing in order to identify potential threats to the organization's financial health and profitability and to make suggestions for mitigating the risk associated with those threats.
This chapter is based on Audit and Assurance. explain the auditor’s liabilities to shareholders and auditees. Explain the concept of due care and the circumstances giving rise to negligence in the conduct of an audit. identify issues and rulings of legal cases with respect to the auditor’s liability to third parties. Enumerate the precautions the auditor should take to avoid litigation.
An internal audit is designed to review what a company is doing in order to identify potential threats to the organization's financial health and profitability and to make suggestions for mitigating the risk associated with those threats.
This chapter is based on Audit and Assurance. explain the auditor’s liabilities to shareholders and auditees. Explain the concept of due care and the circumstances giving rise to negligence in the conduct of an audit. identify issues and rulings of legal cases with respect to the auditor’s liability to third parties. Enumerate the precautions the auditor should take to avoid litigation.
Client Evaluation and Planning the Audit Lecture slide chapter 8
Describe the steps involved in client acceptance and continuance.
State the purpose and content of an engagement letter.
Explain the steps in planning an audit.
Identify the risks of misstatement through understanding the entity and its environment.
Explain the role of analytical procedures in audit planning.
Describe the requirements to consider the risk of fraud in the audit planning process.
Explain the purpose and function of audit working papers.
What quality control mechanisms should major accounting firms have i.pdfFOREVERPRODUCTCHD
What quality control mechanisms should major accounting firms have in place to ensure that
audit partners have the proper training and experience to supervise audit engagements?
Solution
Quality control measures the major Accounting firm have in place in order to ensure that
auditors have proper training and experience to supervise audit engagements are
(1) Integrity, objectivity and independence: The auditor should be straight forward, honest and
sincere in his approach to his professional work. He should maintain an impartial
attitude and both be and appear to be free of any interest which might be regarded, whatever is
actual effect, as being incompatible with integrity and objectivity.
(2) Confidentiality: The auditor should respect the confidentiality of information acquired in the
course of his work and should not disclose any such information to a third party without The
specific authority or unless there is a legal or professional duty to disclose.
(3) Skills and Competence: The audit should be performed and the report prepared with due
professional care by persons who have adequate training, experience and competence in
auditing. The auditor requires specialised skills and competence along with a continuing
awareness of developments including pronouncements of the accounting body on accounting and
auditing matters, and relevant regulations and statutory requirements.
(4) Work performed by others: When the auditor delegates work to assistants or uses work
performed by other auditors and experts, he continues to be responsible for forming and
expressing his opinion on the financial information.
These are the some of the measures to have proper training and experience to supervise audit
engagements
I WOULD LIKE TO SHARE YOU ABOUT LETTER OF ENGAGEMENT IN SHORT
Letter of Engagement: The legal requirement to get the accounts audited so far extends only to
companies, co-operative societies, and registered societies. In these cases, the respective law
governs the appointment of auditors and their duties. In all other cases, it is a matter of contract.
Thank you hope you might feel it helpfull.
An Examination of the Mechanism and Legal Regulation Assuring Audit IndependenceRenzo Del Giudice
Please cite to the respective author of this journal article: Chou, T.K. (2012). An Examination of the Mechanism and Legal Regulation Assuring Audit Independence. UC David Business Law Journal, 12: 225-242.
Palestine last event orientationfvgnh .pptxRaedMohamed3
An EFL lesson about the current events in Palestine. It is intended to be for intermediate students who wish to increase their listening skills through a short lesson in power point.
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
We all have good and bad thoughts from time to time and situation to situation. We are bombarded daily with spiraling thoughts(both negative and positive) creating all-consuming feel , making us difficult to manage with associated suffering. Good thoughts are like our Mob Signal (Positive thought) amidst noise(negative thought) in the atmosphere. Negative thoughts like noise outweigh positive thoughts. These thoughts often create unwanted confusion, trouble, stress and frustration in our mind as well as chaos in our physical world. Negative thoughts are also known as “distorted thinking”.
Welcome to TechSoup New Member Orientation and Q&A (May 2024).pdfTechSoup
In this webinar you will learn how your organization can access TechSoup's wide variety of product discount and donation programs. From hardware to software, we'll give you a tour of the tools available to help your nonprofit with productivity, collaboration, financial management, donor tracking, security, and more.
How to Create Map Views in the Odoo 17 ERPCeline George
The map views are useful for providing a geographical representation of data. They allow users to visualize and analyze the data in a more intuitive manner.
The Art Pastor's Guide to Sabbath | Steve ThomasonSteve Thomason
What is the purpose of the Sabbath Law in the Torah. It is interesting to compare how the context of the law shifts from Exodus to Deuteronomy. Who gets to rest, and why?
Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
2. Learning objectives
1. Explain what an audit is, what it provides, and why
it is demanded
2. Describe how assurance relates to auditing
3. Discuss the importance of the profession, case law
and regulation to auditing
4. Explain the importance of national and
international auditing standards
5. Evaluate whether audits meet the demands of
users.
2
3. What is an audit?
“A systematic process of objectively obtaining
and evaluating evidence regarding assertions
made about economic actions and events to
ascertain the degree of correspondence
between those assertions and established
criteria and communicating the results to
interested users”
American Accounting Association (1973)
3
4. What is an audit?
systematic process
objectively obtaining and evaluating evidence
regarding assertions made about economic
actions and events
ascertain the degree of correspondence
between those assertions and established
criteria
communicate the results to interested users
4
5. The objectives of an auditor
To obtain reasonable assurance about whether
or not the financial report is free from material
misstatement.
To express an opinion about whether the financial
report is prepared in all material respects in
accordance with an applicable financial reporting
framework.
To report that opinion. ASA 200.11
5
6. The financial reporting and
auditing framework
In preparing the financial report, management
asserts that it is a true and fair record
The audit process to obtain evidence to validate
management’s assertions
Independent audit report to express an opinion as
to whether the financial report is true and fair
Financial report users can use the information
with reasonable assurance that it is free from
material misstatement
6
7. The demand for audits
Agency theory
Information hypothesis
Insurance hypothesis
Regulation
7
8. Agency theory
A principal contracts an agent to work on their
behalf
Each party is motivated by self interest
Information asymmetry arises
An independent audit reduces the incentives for
problems
8
10. Information hypothesis
Investors demand quality information in assessing
the risks and returns of their investments
Audits improve the quality of information in
financial reports
Reduces information risk and leads to improved
decision making
10
11. Insurance hypothesis
“the ability to shift financial responsibility for
reported data to an auditor lowers the expected
loss from litigation or related settlements to
managers, creditors who might demand an audit
to show they are being prudent to insure against
losses” Wallace (1980)
11
12. Insurance hypothesis
Interested parties:
Investors and creditors demand an audit to
be prudent and insure against losses
Regulators to insulate themselves from
criticism by directing blame to auditors
12
13. Regulation
Annual audits required by:
Companies, registered schemes & disclosing
entities (excludes small proprietary companies)
Commonwealth and state government
departments, statutory authorities, government
companies and business undertakings,
municipalities
Not-for-profit organisations
13
14. Providers of audits
Financial audits are provided by independent auditors
Must be registered with ASIC to be able to perform
audits on reporting entities
Criteria set out in s.1280 Corporations Act
Educational qualifications
Work experience
Good character (fit and proper person)
Member of ICAA or CPA Australia
14
15. Assurance
In the Framework for Assurance Engagements an
assurance engagement is defined as:
“An engagement in which a practitioner
expresses a conclusion designed to enhance
the degree of confidence of the intended users
(other than the responsible party) about the
outcome of an evaluation or measurement of a
subject matter against criteria” (paragraph 8)
15
16. Assurance engagements
May be financial or non-financial
The level of assurance will vary according to the
particular engagement (according to the amount
of evidence collected)
Audits of annual financial reports imply a
reasonable (or high) level of assurance
In comparison (for example) half-yearly reviews
imply a moderate (or low) level of assurance
16
19. The accounting profession
Professional bodies
Institute of Chartered Accountants in Australia
CPA Australia
National Institute of Accountants
Practice entities
19
20. The accounting profession
Professional accounting bodies’ are involved in
the development of audit practice by:
Developing standards of practice,
professional education and rules of conduct
Ensuring professional conduct and self-
regulation
Maintaining standards of qualifications
20
21. Case law
Early cases associated with detection of fraud
Change of focus resulting from increased
complexity, increasing size of businesses and
separation of owners from managers
Greater emphasis on ‘reasonable skill and care’
Concept of ‘reasonable assurance’
21
22. Case law
Pacific Acceptance case (1970)
Concept of ‘reasonable care and skill’ called for
changed standards to meet changed business
conditions.
Auditor should pay due regard to the possibility
of fraud and actively investigate the possibility
of fraud if suspicious circumstances exist.
22
23. Regulation
Corporations Act
Responsibility for accounting and auditing
standard settings under government control
• ???????????????????????????????????
• Regulatory changes focused on reporting issues
• Other issues involved fee dependence and importance of
the auditor in corporate governance
23
24. Regulation
Australian Securities and Investment
Commission (ASIC)
Regulates corporate, markets and financial
services sector
Advise on selling of and disclosure of financial
products and services to consumers
Majority of work carried out under Corporations
Act
24
25. Regulation
Companies Auditors and Liquidators
Disciplinary Board (CALDB)
Established under ASIC Act
Hears breaches under Corporations Act by
auditors and liquidators
Australian Securities Exchange (AXS)
25
26. Regulation of accounting
and auditing
Government
Financial Reporting Council
• Oversee accounting and auditing
standard setting
• Monitor companies’ compliance with
audit-related disclosure requirements
• Advise on continuing steps to enhance
auditor independence
• Monitor disciplinary proceedings of
accounting bodies
Professional
accounting
bodies
Other
stakeholders
ASX
Corporate
Governance
Council
ASIC
CALDB
AASB AUASBSecretariat
26
27. The early 2000s- challenges
and changes
Corporate collapses overseas and in Australia
Collapse of Enron led to the Sarbanes-Oxley Act
Collapse of HIH led to a Royal Commission
Ramsay Report
Some recommendations from the HIH Royal
Commission and the Ramsay Report were
incorporated in Corporate Law Economic Reform
Program (CLERP 9)
27
28. The early 2000s- challenges
and changes
Major impacts
Role of audit in corporate governance
Auditor independence
Audit quality
28
29. Auditor Independence
To conduct the audit without bias and appear to
be objective to those relying on the results of the
audit. Key issues include:
Non-audit services
Audit partner rotation
Auditor working for the client
29
30. Audit Quality
Audit quality is that characteristic of auditing
whereby the auditor undertakes his/her work in
both a technically competent manner and ethical
manner, including giving consideration to the
public interest. By conducting the audit in this way,
the auditor can ensure that his/her judgement is
not compromised and that complex issues can be
properly dealt with.
30
32. Auditing Standards
Mandatory requirements and guidance
ASA 101 explains how auditing standard are to
be interpreted and applied
Have “the force of law” for audits undertaken
pursuant to the Corporations Act
The professional bodies require application
Clarity Project (commenced 2004)
International harmonisation
32
33. Forward
Framework for Assurance Engagements
33
Standards on
Review
Engagements
Glossary
ASQC 1
Assurance No Assurance
Audits and reviews
of historical fin. info
Australian
Auditing
Standards
Standards
on Assurance
Engagements
Standards
on Related
Services
Assurance engagements
other than audits & reviews
of historical fin. info
Engagements other
than audits, reviews
& other assurance
engagements
Guidance Statements
AUASB PRONOUNCEMENTS
34. Does the audit meet demands of
users?
Company
management
Audited
financial
reports
Employees
Bankers
Creditors
Wider public
Government
Future
shareholders
Current
shareholders
34
35. Do audits provide good value?
Assessing value can be examined by asking:
How often are they associated with company
failure?
Do auditors get the audit report correct?
How much do they cost?
Do audits provide economic value in the
market?
35
36. Audit expectation gap
“the difference between what auditors
actually do when they conduct an audit and
what shareholders and others think auditor's
do, or should do, in conducting the audit”
Report of HIH Royal Commission
36
37. Audit expectation gap
Perceived
Performance
of auditors
Society’s
expectation
of auditors
Deficient
performance
Deficient
standards
Unreasonable
expectations
Audit expectation-performance gap
Performance
gap
Reasonableness
gap
37
38. Audit expectation gap
Remedies to address unrealistic expectations:
Education of stakeholders about what an
audit provides
Remedies to address deficient standards:
Reporting on internal control
Detection of fraud
Evaluation of going concern
38