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ACC 3600 Notes - Summary Auditing and assurance
Auditing and Assurance (Monash University)
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Week 1 Introduction and overview of audit and assurance
1. Financial statement Audit
An engagement designed to express an opinion about whether the financial report is prepared in all material
respects in accordance with a financial reporting framework, accounting standard and Corporation Act. Auditor
cannot guarantee that financial report is free from error or fraud. Auditor cannot provide absolute assurance.
2. The duties of an independent auditor engaged to perform a financial report audit
 Report to members and express opinion whether the financial report is prepared in all material
respects in accordance with a financial reporting framework, accounting standard and
Corporation Act;
3. The Level of Assurance Services
Reasonable assurance is the highest level of assurance. It means that the auditor has conducted audit procedures
and gathered sufficient and appropriate evidence to provide an opinion on the truth and fairness of the financial
reports. The auditor provides an opinion stated in the positive form. Such as financial statement audit.
Limited assurance is a lower level of assurance. The auditor performs limited audit procedures and gathers less
evidence. The auditor provides an opinion stated in the negative form. Such as review half year financial report.
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4. Audit Expectation Gap
Definition: the expectation gap that exists between what users expect of an auditor and the service auditor
provide. The gap is caused by unrealistic user expectations such as:
 the auditor is providing complete assurance
 an unqualified audit opinion is an indicator of complete accuracy
 the auditor will definitely find any fraud and the auditor has checked all transactions
The expectation gap can be reduced by:
5. The demand for auditing can be explained by the following three theories:
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Week 2 Ethics, Legal Liability and Client Acceptance
1) Fundamental principles Code of Ethics
 Integrity
 Objectivity
 Professional competence & due care
 Maintain knowledge and skill at a level required by professional bodies;
