AUDIT1 2.docx - AUDIT Chap 1 Type of audit Financial...

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AUDIT Chap 1 Type of audit Financial statement audit - It is conducted to determine whether the overall financial statements are prepared according to the acceptable accounting principles Compliance audit - It involves checking whether the organization follows the specific laws, regulations, specific procedures set by the authority. Forensic audit - It is a special investigation audit to track and collect evidence usually for investigation and prosecution of criminal acts External auditor - engaged by principal - more independence compares to internal auditors - report to audit committee and shareholder Internal auditor - employed by company - not easy to achieve independence - report to audit committee, board of director or top management Government auditor - perform audit for the office of Auditor general - audit the financial statements of federation, states, public authorities, and statutory bodies Chap 2 Ethical Threats - compliance with the fundamental principles of professional ethics may potentially be threatened by a broad range of circumstances Self-interest threat - auditor could benefit from a financial or other interest in an audit client Self review threat - auditor put himself in a position of reviewing the subject that previously responsible Advocacy threat - auditor promote or may be perceived to promote, an audit client’s position or opinion to the point that subsequent objectivity is compromised Familiarity threat
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- it occurs when by virtual of a close relationship with an audit client, its directors, officers or employees - auditor may become too sympathetic to the audit client’s interest Intimidation threat - it occurs when the auditor may be threatening by the audit client - an act frightens or threaten someone in order to persuade them to do something that you want them to do Fundamental Principles of ethic Integrity - members shall be honest, straightforward, truthfulness and have strong moral principle in all professional and business relationships Objectivity - fair and unbiased - members shall not bias, conflict of interest or undue influence of others to override professional or business judgements. Professional competence and due care - members have a continuing duty to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional services based on current development in practice, legislation and techniques and act diligently and in accordance with applicable technical and professional standards Confidentiality - members shall respect the confidentiality of information acquired as a result of professional and business relationships Professional behavior - members shall comply with relevant laws and regulations Duties of directors - to ensure proper accounting records are kept - to protect company’s assets - to adopt good accounting policies Right of external auditors - access to record - sufficient information and explanations - attendance at general meeting - right to speak at general meeting - right to receive written resolution Chap 4
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