Auditing Overview (Ch 1 - 6)

Auditing Overview (Ch 1 - 6) - Definition of Auditing...

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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 and communicating the results to interested parties. Summary of Ch 1 to 6)
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Three-Party Accountability Subject Matter Auditor Accountable Party User(s) Accountability Conclusion
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A Definition of Auditing Relating to “Risk Reduction” 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. Information risk: Financial statements will fail to appropriately reflect economic substance of business activities, including business risks and uncertainties. The financial statements will be materially false and misleading Auditing: – A process of reducing information risk to users of financial statements. From the auditor’s perspective there are two major categories of information risk. Audit risk Accounting risk
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Practice Standards Practice standards are general guides for professional work. Generally accepted auditing standards (GAAS). Assurance standards. General Standards of Quality Control for Firms Performing Assurance Engagements. Quality control standards as reflected in peer reviews and practice inspections. Discuss CAS220 Quality Control
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Objectives of the Audit of Financial Statements The overall objective of the audit is to enable the auditor to express an opinion on whether the financial statements are prepared, in all material respects, with an applicable (acceptable) financial reporting framework.
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General Standard The auditor should comply with relevant professional ethical requirements relating to audit engagements. Competence. Objectivity. Due professional care. Discuss CAS 200 vs HB sec 5090,5095, 5100, 5021, New Concepts & Requirements
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GAAS Examination Standards 1. The auditor should conduct an audit in accordance with Canadian Audit Standards (CASs). 2. In determining the audit procedures to perform in accord with CAS’s “scope of an audit,” the auditor should comply with each CAS relevant to the audit.
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GAAS Examination Standards 3. The auditor should obtain reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether due to fraud or error. a degree of confidence of 90 to 99 percent confidence would be normal. 95% confidence is the most common degree of confidence.
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4. The auditor should plan and perform an audit to reduce audit risk to an acceptably low level that is consistent with the objective of an audit. The risk that an auditor expresses an
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Auditing Overview (Ch 1 - 6) - Definition of Auditing...

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