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Notes on Auditing by Saqib Shaikh

Notes on Auditing by Saqib Shaikh

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Published by: PRINCESAQIBSHAIKH on Apr 24, 2010
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12/18/2014

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 On
 
NOTES ON AUDITING
 
CELL: 03337502630
NOTES ON AUDITING
 
CONTENTSISA NO TITLE OF ISAs
PAGE N
ISA 200
Objective and General Principles Governing an Audit
2
ISA 210
T
erms of Audit Engagements
 
4
 
ISA 220
Q
uality Control for Audits of Historical Financial Information
 
8
 
ISA 230
Audit Documentation
 
1
6
ISA 240
Th
e Auditor¶s Responsibility to Consider Fraud
 
2
1
 
ISA 300
Planning an Audit of Financial Statements
 
36
ISA 315
U
nderstanding t
h
e Entity and Its Environment and Assessing t
h
e Risks of Material Misstatement
4
0
ISA 320
Audit Materiality
 
5
8
 
ISA 500
Audit Evidence
 
60
ISA 505
External Confirmations
66
ISA 520
Analytical Procedures
 
7
1
 
ISA 530
Audit Sampling and Ot
h
er Means of 
T
esting
 
75
ISA 550
Related Parties
 
9
0
ISA 560
Subsequent Events
 
94
 
ISA 580
Management Representations
 
9
7
ISA 600
U
sing t
h
e Work of Anot
h
er Auditor 
 
99
 
ISA 610
Considering t
h
e Work of Internal Auditing
 
1
02
ISA 620
U
sing t
h
e Work of an Expert
 
1
05
ISA 701
Modifications to t
h
e Independent Auditor¶s Report
 
70
1
 
ISRE 1410
Review of Interim Financial Information Performed by t
h
e IndependentAuditor of t
h
e Entity
11
2
Important definitions
119
 
PRINCE
SAQIB SHAIKH
STUDENT
 
PRINCE PRINCE PRINCE
MADE BY: SAQIB SHAIKH Page
2
 
NOTES ON AUDITING
 AUDIT 
:
 
Audit is independent examination of financial statements of an entity with the objective of expressing opinion whether these financial statements are free from material (quantitative,qualitative) misstatements (fraud, error).
SCOPE OF AUDIT:
 
Scope of audit refers to the audit procedures necessary to achieve the objective of audit.
 
Scope of an audit is govern by auditing standards, local laws (i.e. SECP), and guidance issuedby auditors professional organizations (i.e. ICAP).
OBJECT OF AN AUDIT:
 
Responsibility for the preparation and presentation of financial statement is of themanagement of company, the responsibility of an auditor is to express an opinion on thefinancial statement based on audit.
 
Audit enhances the credibility of financial statements.
 
F
uture visibility of company is not guaranteed.
 
The auditor is not responsible for a subsequent discovery of material misstatements untiland unless it is proved that the auditor is:
 
Negligent or
 
Involved with the management in the fraudulent activities.
 
An absolute assurance is not provided by auditors because:
 
W
ork of the auditor is permeated by judgments
 
M
ost audit evidences are persuasive rather than conclusive.
 
Audit is of test nature.
 
Internal control has inherent limitations.
 
Not all the items in the financial statements are tested. The testing is based onsampling.
 
Audit evidence some times indicates what is probable, not certain.
 
Internal control:
internal control is the system design by the management to prevent,detect and correct fraud and error (fraud and error can not be completely eliminated butcan be reduced lower acceptable level).
 
Code of ethics:
 
Independence
 
Integrity
 
PRINCE PRINCE PRINCE
MADE BY: SAQIB SHAIKH Page
3
 
 
Confidentiality
 
Objectivity
 
Technical standard
 
Professional competence and due care
 
Professional skepticism
: The auditor should neither assume management honest ordishonest; the audit should be conducted with questioning mind.
 
W
indow dressing
: Showing better financial position than actual.
 
Teeming and lading
:
M
isappropriation of cash.
 
Financial reporting frame work
: It is a frame work that assists the management in thepreparation of financial statements.
 
M
anagement letter:
It is the letter issued by the auditor to the client identifies theweakness in internal control system. This letter is also called weakness letter.
 
Negative opinion:
Nothing has come to our attention that causes us to believe that financialstatements are not free from material misstatement.
 
Sufficient:
Sufficiency is the measure of quantity of audit evidence and quantity is themeasure of risk of material misstatement.
 
Higher the risk more audit evidence is needed.
 
Appropriateness:
It is the measure of quality, reliability persuasiveness.
W
hat is appropriateis the matter of professional judgment.
 
There are certain guide lines /generalizations which are used by auditor to evaluateappropriateness of audit evidence.
 
Audit evidence in written form is more reliable than oral.
 
Audit evidence in the form of original is more reliable than photo copies.
 
Audit evidence obtained from external sources is more reliable than audit evidenceobtained from internal sources.
 
Audit evidence obtained directly is more reliable than audit evidence throughinference.
 
Audit evidence obtained from internal sources is more reliable when internalcontrols are effective.
 
Element of audit report:
 
Title
 
Addressee
 
Opening paragraph
 
Responsibility
 
Opinion
 
Signature
 
Date
 
Location

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Muhammad Naeem added this note
SAQIB , you have done good job. i hve taken full understanding from your notes that are very short notes, thanks for that................................................................................................................................ Regards!!!!!!!!!!!!!!
Ijlal Ashraf liked this
Maria Zohaib added this note
hi saqib u hv done excellent work............ but its not downloading...how i download it.... plz my CA mod D paperz are in next month and i need these notes severly..... plz reply soon
Kanza Asad added this note
excelent experience
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