CACC521-Week01-text

CACC521-Week01-text - CACC521Week01 GregCaersOSFI...

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CACC521-Week01 24/09/2010 19:28:00 Greg Caers – OSFI CICA handbook assurance section part 1. Page 42 - exhibit 2-3 What is auditing Audit re provide assurance or opinion to 3rd party statements have to reflect accuracy Materiality Audit within the confines materiality Quantitative and qualitative guidelines Criteria uses GAAP Eg. AR recorded at net realizable value Issue opinion that is unqualified 1. Explain the importance of auditing. Audit opinion reduces information risk. Reasons for audits – aspects of information risk
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User reliance potential that infor is incorrect motivation or bias of provider management may be biased in preparation of statements Remoteness of information Audit opinion is directed towards the shareholder Complexity of data inadvertent error or fraud plan to reduce fraud to an acceptably low level business purchaser will hire auditor to audit a business that is for sale. Auditor provides opinion on financial statements. 3 party accountability auditor is expected to provide the user with the opinion Auditors provide assurance as to the accuracy of accounting information. Why can auditors lend creditability Trained, qualified follow GAAS, (old) understand GAAP external auditor is independent o Haven’t done the accounting
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o don't own shares o not intimidated o no familiarity. Spouse isn’t on board o no conflict of interest. Apply professional judgement o Critical thinking o how much evidence to gather to support opinion defintion  –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 and  communicating the results to interested parties. Evidence regarding assertions eg. AR - assertions o valuation o that it exists in good form with another party o completeness – timing, dates o cutoff o Program – confirmation of AR Test for receipts – trace receipts to bank Criteria – GAAP AR has to be at net realizable value Audit Objectives The objective of the audit of financial statements is to express an opinion  whether the financial statements are prepared, in all material respects, in  accordance with the applicable financial reporting framework 
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3. Business Risk –Business risks result from significant conditions, events, circumstances or  actions that might adversely affect the entity’s ability to achieve its objectives and  execute its strategies. Risk that client cannot fulfill strategy
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CACC521-Week01-text - CACC521Week01 GregCaersOSFI...

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