Forming an opinion and reporting on financial

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Forming an Opinion and Reporting on Financial Statements ISA 705 Modifications to the Opinion in the Independent Auditor’s Report ISA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report ISA 710 Comparative Information – Corresponding Figures and Comparative Financial Statements ISA 720 The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements
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Specialized Areas ISA 800 Special Considerations – Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks ISA 805 Special Considerations – Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement ISA 810 Engagements to Report on Summary Financial Statements
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Sections in ISAs Introductory material Objectives Definitions Requirements Application and other explanatory material
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Overview of the Financial Statement Audit Process
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Fundamental Concepts in Conducting a Financial Statement Audit Materiality Audit Risk Evidence
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Materiality Misstatements, including omissions, are considered to be material if they, individually or in the aggregate, could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
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Audit Risk Audit risk is the risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated. The auditor’s report with an unmodified opinion states that the audit provides only reasonable assurance that the financial statements do not contain material misstatements. Reasonable assurance implies some risk that a material misstatement could be present in the financial statements and the auditor will fail to detect it.
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Evidence Regarding Management Assertions Relevance – Is the information related to the specific assertion being tested? Reliability – Can the information be relied upon to signal the true state of the specific assertion being tested? Evidence that assists the auditor in evaluating management’s financial statement assertions consists of the underlying accounting data and any additional information available to the auditor, whether originating from the client or externally.
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Sampling: Inferences Based on Limited Observations Auditors use a sampling approach to examine a subset of the transactions based on previous audits, an understanding of the company’s internal control system, or knowledge of the company’s industry. It would be too costly for the auditor to examine every transaction.
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Major Phases of the Audit Client acceptance/continuance Preliminary engagement activities Plan the audit Consider internal control Audit business processes and related account (e.g. revenue generation) Complete the audit Evaluate results and issue audit report
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Issuance of Audit Report
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