Sie sind auf Seite 1von 3

FOCUS NOTES – Auditing Theory oDetermination of the NTE (Nature,

Timing and Extent) of Audit


Wesleyan University – Philippines Procedures to be performed
Integrated Review 1 2. Audit Client
Raymund Francis Escala, CPA, MBA o Prepare the FS in accordance with
GAAP
o All systems, processes & items are
TYPES OF AUDIT: the responsibility of the management
1. As to type of Assertions: o Fraud and Error detection are also
a. Financial Statement Audit charged to the management.
i. O – Fair presentation 3. Users of FS
ii. SM – fairly presented o Written Audit report
iii. SMI – Financial Statements  Who?
iv. C – PFRS  Potential Investors
v. U – Users of FS  Lenders or creditors
vi. A – Independent Auditor SUBJECT MATTER INFORMATION
b. Operational Audit - Auditability of the FS
i. O – Operating Efficiency and o FS only – 
Effectiveness o FS with supporting documents 
ii. SM – Efficiency and SUITABLE CRITERIA
Effectiveness of Operations - IFRS or PFRS
iii. SMI – Operations itself SUFFICIENT APPROPRIATE EVIDENCE
iv. C – contribution to the CONCLUSION
attainment of the goals set by Types:
TWCG and BoD Level: Reasonable – high but not absolute
v. U – TCWG and BoD Form: Positive
vi. A – Internal Auditor Why absolute assurance cannot be attained?
c. Compliance Audit 1. Inherent Limitations
i. O – degree of compliance o Use of Testing/Sampling
ii. SM – compliance with laws  Exposure to sampling risk
and regulations  The risk that the
iii. SMI – every activity which is conclusion reached may
the basis of compliance differ from the conclusion
iv. C – laws and regulations to be reached if the
v. U – government regulators whole population is
vi. A – government auditors subjected to the same
2. As to the type of Auditor: audit procedures
a. Independent o Use of Judgment
b. Internal  Acknowledgement of Human
c. Government Limitations
FINANCIAL STATEMENTS AUDIT (FS Audit)  Exposure to Non-sampling
Objective: to express an opinion regarding the risk (can never be eliminated)
fairness and presentation of the FS. o Nature of Evidence
 Pervasive rather than
Elements: “3 SECC” (3 SEXY) conclusive
- THREE - PARTY RELATIONSHIP  Information given will
- SUBJECT MATTER INFORMATION always have a room
- SUFFICIENT APPROPRIATE EVIDENCE for doubt
- SUITABLE CRITERIA  No first-hand
- CONCLUSION Knowledge
 100% trust  even if
3-PARTY RELATIONSHIP confirmed
1. Auditor o Nature of Assertions
o Expression of opinion  FS can be wrong from the
o Independence start
o Competence
 Exposure to Inherent 3. Conflict
Risk o No long-term conflict must exist
o Exposure to Control Risk between the auditor and the
 Components of Audit Risk: management
 Control 2 Conflicts:
 Inherent a. Non-compliance with standards
The need for FS Audit: b. Non-performance of audit
- Users need reliable information hence, procedures
information risk must be lessened. 4. Benefit
o What is Information Risk? o Should benefit the public
 The risk that the wrong o Correlated to bias
information may be believed 5. Internal Control
or perceived to be true. o Effective IC reduces the possibility of
o How to lessen Info. Risk? error
1. Let the user verify the information 6. GAAP
2. Share the consequence to the o Consistent application of GAAP
preparer  Required
3. Let the FS be audited – most  It will result to more reliable
efficient way information
o What are the factors that contribute to
Information Risk? -oOo-
 Volume of Data What was held true in the past will hold true in
 1000 trans – 1  the future in the absence of any evidence to the
o Difficult contrary
 5 trans – 1  -oOo-
o Easy
 Remoteness of Data Common Examples of Non-Assurance
 Not all data are Engagement:
available f 1. Agreed-upon
 Biases (preparer) o Procedures to be performed are
 Conflicting motives of “agreed-upon”
the preparer and user o No assurance since no element of
The demand for FS Audit: surprise as to the NTE of the
1. Financial Consequences procedures to be performed.
2. Remoteness of Information (either by o REPORT: Factual findings
distance or time) o USERS: the persons who agreed to
3. Expertise is required (when verifying the procedures.
information) 2. Compilation
4. Conflicts of interest (between the o Bookkeeping and other related
management and users) services
o Those that entail or require
General Principles governing FS Audit accounting expertise
Compliance with: 3. Management Consultancy
1. Code of Ethics
2. Phil. Standards on Auditing
3. Professional Skepticism
4. Professional Judgment
5. Sufficient Appropriate Evidence

Theoretical Framework:
1. Verifiable
o All data are verifiable
o Unrestricted access to data.
2. Independence
o Maintenance of independence
The Code of Ethics
Why adopt?
1. RA 9298 – mandate of BoA
2. Inherent to the Profession
a. Profession defined:
i. Mastery
ii. Code of Conduct
iii. Acceptance of responsibility
to the society (Public
Interest)
3. Obtain and Maintain public trust and
confidence

Das könnte Ihnen auch gefallen