Advanced Auditing
1
Introduction, auditing standards and IFRS, their relevance, Framework of Philippine Standards on
Auditing
Module 001
Introduction, auditing standards and IFRS,
their relevance, Framework of Philippine Standards on
Auditing
At the end of this module, you will be able to:
1.
To learn
the origin of Auditing
2.
To discuss the Auditing
3.
To be able identify other audit related activities
4.
To be able to familiarize with the Auditing standards
5.
To learn different types of Audit
6.
To be able to learn the Frameworks of Philippine standards of Auditing
Origin of Audit
From the time of ancient Egyptians, Greeks and Romans, the practice of auditing the
accounts of public institutions existed. Checking clerks were appointed in those days to
check the public accounts. To locate frauds as well as to find out whether the receipts and
payments are properly recorded by the person responsible was the main objective of
auditing of those days.
During the 18th century industrial revolution brought in large scale production, steam
power, improved facilities and better means of communication. This resulted in the origin of
joint stock form of organizations. Shareholders contribute capital of these companies but do
not have control over the day-to-day working of the organization. The shareholders who
have invested their money would naturally be interested in knowing the financial position
of the company. This originated the need of an independent person who would check the
accounts and report the shareholders on the accuracy of the accounts and the safety of their
investment.
The word ‘Audit’ is originated from the Latin word
ey are accurate and in
hich means ‘to hear’.
In the earlier days, whenever there is suspected fraud in a business organization, the owner
of the business would appoint a person to check the accounts and hear the explanations
given by the person responsible for keeping the account and funds. In those days, the audit
is done to find out whether the payments and receipt are properly accounted or not. The
objective of modern day accounting is not only for the verification of cash but to report the
financial position of the undertaking as disclosed by its Balance sheet and Profit and Loss
Account.
Course Module
Advanced Auditing
2
Introduction, auditing standards and IFRS, their relevance, Framework of Philippine Standards on
Auditing
Defining Audit
ISA 200 states that the purpose of an audit (a form of assurance engagement) is to enhance
the degree of confidence of intended users in the financial statements. This is achieved by
the auditor expressing an opinion on whether the financial statements of an entity are
prepared, in all material respects, in accordance with an applicable financial reporting
framework. A financial reporting framework may be provided, for example, by
countryspecific legislation plus international financial reporting standards.
