COLLEGE OF BUSINESS AND ACCOUNTANCY

Topic:
 Overview of the Audit Process
Learning Outcomes:

At the end of this module, the students must be able to:

 Demonstrate the activities conducted in performing FS audit
 Enumerate the different categories and types of assertions made by the entity
 Discuss the process involving client acceptance, terms of the audit engagement, and the
considerations taken in accepting a change in an engagement.
Introduction (With Core Values Integration):
In conducting financial statements audit, we carefully followed the steps laid down in the Audit
Process in order to have an accurate and useful output. We cannot skip steps and jump into another.
Each step in the audit process plays an important role in creating a valuable audit report that will be
useful to the intended users. If the auditor decides to conduct and start the audit, it is important that
each step is followed in the right order. Just like the story of God’s creation. If we know about
creation, and believe, we can understand our basic relationship to God, who He is and what claim He
has on our lives and how we live them. It is this understanding that gives us a sense of natural order
in our lives, gives us the knowledge of a greater purpose in our lives and gives us meaning or value
to our very being.

Body:
Kindly read pages 121-138 of your reference textbook.
The following are the guide questions that you may answer during the reading process:
a. Demonstrate the overview of the audit process.
b. What are the categories and types of assertions made by the entity through its FS?
c. What are the responsibilities of management and those charged with governance?
d. What are the major and specific audit procedures?
e. Differentiate the types of opinion that an auditor may express.
f. What should the auditor consider in making a decision on whether to accept or reject an audit
engagement?
g. What are the key considerations taken before accepting a change in an engagement?
Summary/Conclusion:
The audit process begins with a set of assertions about financial results and position. These
assertions provide the framework for specifying the objectives of the audit. The auditor then
performs procedures they will attain the defined objectives by gathering sufficient, appropriate
evidence as a basis in forming an opinion about the fairness of the financial statements.
References:
PSA 200 – Overall Objectives of the Independent Auditor and the conduct of an Audit in accordance
with the International Accounting Standards
PSA 210 – Agreeing the Terms of Audit Engagement
PSA 500 – Audit Evidence
Escala and Bercasion (2021). Auditing and Assurance Services: Theory and Principles. 2021 Ed.
Escala Publishing House
Salosagcol, Tiu, and Hermosilla (2018). Auditing Theory: A Guide In Understanding the Philippine
Standards on Auditing. 2018 Ed. GIC Enterprises&Co., Inc.