CHAPTER 3

OVERVIEW OF AUDITING
 WHAT IS AUDITING?

• Systematic process by which a competent, independent person objectively

obtains and evaluates evidence regarding assertions about economic actions
and events to ascertain the degree of correspondence between those
assertions and established criteria and communicating the results.

• In other words ---- (auditing for dummies)

 OBJECTIVE OF AUDITING

To enable the auditor to express an opinion whether the financial statements are
prepared, in all material respects, in accordance with an identified financial
framework.
 PHILIPPINE STANDARDS ON AUDITING
(PSA)

• Ano to siya?
• Ano purpose niya?
• Explanation
 GENERAL TYPES OF AUDIT

A. Independent Financial Statements Audit

A. Methodological review and objective examination of financial statements

B. Internal Audit
A. Designed to add balue and improve the organization’s operations.

C. Government Audit
Determination of whether government funds are being handled properly
and in compliance with existing laws and whether programs are being
conducted efficiently and and economically.
 ETHICAL REQUIREMENTS

Independence
Intergrity
Objectivity
Professional competence and due care
Confidentiality
Professional behavior
Technical standards
MNEMONICS: POCIPIT
 REASONABLE ASSURANCE

• Free from material misstatements

• Why reasonable only? Mayta hindi absolute?
• Inherent limitations
 TYPES OF AUDITORS

1. Public Accounting Firms

2. Internal Auditors
3. Government Auditor

4. LAGAY PICTURE NG NANAY NI CHESKA (GOVT)

5. And maam simba
AUDITING VS. ACCOUNTING

CHUNGKANG CHUNGKANG

CHUNGKANG
 CHAPTER 4

REGULATION OF THE PRACTICE OF PUBLIC

ACCOUNTANCY
 PUBLIC REGULATION: OBJECTIVE

• To protect the investing public from fraud, gross negligence, and failure to
comply with the laws and regulations.
• Particularly in the preparation and independent audit of financial statements.
• Picture: crimes, corrupt people
 RA 9298: THE ACCOUNTANCY ACT OF
2004

• Objectives:
• Standardization and regulation of accounting education
• Examination for registration of CPAs
• Supervision, control, and regulation of the practice of Accountancy in the Philippines.
 SCOPE

• Public Practice
• Commerce and Industry
• Academe
• Government
• NMEMONICS: CPAG (SIPAG)
 ARTICLE II: PROFESSIONAL REGULATORY
BOARD OF ACCOUNTANCY

• Composition of BOA
• Chairman Chairman

• 6 members
6 Members

• Pop quiz! Who appoints the members of the BOA?

 QUALIFICATIONS OF MEMBERS OF THE
PROFESSIONAL REGULATORY BOARD

Pictures with labels

a. Baby and pilipin plag
b. Old cpa
c. Good citizen
d. idk
WE SKIPPED THE BORING PART
 CPA’S LEGAL LIABILITY

Misstatements:
1. Improper or Inadequate disclosure
2. Inappropriate valuation
Other lawsuits:
1. Did not discover an employee defalcation
2. Did not complete the audit on the agreed date
3. Inappropriate withdrawal from an audit.