Beruflich Dokumente
Kultur Dokumente
Chapter 1
Auditing and Assurance Services
"If you want to be successful, it's just this simple: Know what you're doing. Love what you're doing. And believe in what you're doing." -- Will Rogers
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Government
Financial Statements
Community
Management
Lenders of money
Suppliers
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Financial analysts and investors depend on financial reports for making stock purchase and sale decisions. Suppliers and creditors use financial reports to decide whether to give trade credit and bank loans. Labor organizations use financial reports to help determine a companys ability to pay wages. Govt. agencies and Congress use financial information in preparing analyses of economy and in making laws concerning taxes.
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Definition of Auditing
Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between the assertions and established criteria GAAP and communicating the results to Auditor's Report/ interested users.
Other Reports
Types of Audits
Financial Statement Audits
An audit of financial statement is conducted to determine whether the overall financial statements are stated in accordance with specified criteria. The specified criteria are principles set out in the accounting standards and the financial statement prepared by using the cash basis or accrual basis or some other basis of accounting appropriate for the organization. The financial statements commonly are included as follows: - The statement of balance sheet - The statement of profit and loss - The statement of cash flows - Notes to the accounts
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Performance Audits
The study of business operations for the purpose of making recommendations about the efficient use of resources , effective achievement of business objectives, and compliance with company policies. The goal of operational audit is also to help managers discharge their management responsibilities and improve profitability.
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Compliance Audits
The purpose of a compliance audit is to determine whether the auditee is following specific procedures, rules, or regulation or policies set down by some higher authority or the company.
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Type of auditors
External Auditor
Internal Auditor
Government Auditor
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External Auditor Many public accounting firms have as their primary responsibility the performance of audits of the historical financial statements of companies registered under the companies act.
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Internal Auditor
Internal auditors are employed by individual companies to audit for management. Internal auditing is an independent appraisal function established within an organization who examine and evaluate its activities or operations.
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Government Auditor
In some countries, the constitution of the federation provides for the appointment of the Auditor General who is responsible for auditing all the federal and state accounts as well as those of the public authorities and statutory bodies.
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Public Accounting Firms or Audit Firms Many public accounting firms have their primary responsibility for the performance of audits of the historical financial statements of companies registered under the companies act. - KPMG Peat Marwick - Coopers & Lybrand - Deloitte & Touche - Ernst & Young - Price Waterhouse
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Consulting Services
Partner
Manager
Manager
Manager
Manager
Exhibit 1-2 The Relationships Among Auditing, Attestation, and Assurance Services
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Assurance Services
Assurance services are independent professional services that improve the quality of information, or its context, for decision makers.
Examples
Internet website certification (WebTrust) Business risk assessment ( Risk Advisory) Information system security reviews (Systrust)
Attestation Engagements
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An attestation engagement is one in which a practitioner is engaged to issue or does issue a report on subject matter or an assertion about the subject matter that is the responsibility of another party.
Some financial attestation engagements (other than audits) Financial statistics Pro forma financial information Financial forecasts and projections Some non-financial attestation engagements Compliance with contractual requirements Effectiveness of internal control systems Inventory quantities and locations ( Agree Upon Procedures)
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Assurance services
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Engagement Overview
ENGAGEMENT PLANNING
SUBSTANTIVE PROCEDURES
ISSUE REPORT
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Professional Ethics
The auditor should comply with the 'Code of ethics for professional accountants' issued by the International Federation of Accountants. Ethical principles governing the auditor's professional responsibilities are:
Professional Ethics
Independence Integrity
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Objectivity
Professional competence and due care Confidentiality Professional behavior, and Technical standards (the International Auditing Standards)
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End of Chapter 1