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OVERALL OBJECTIVES OF THE

INDEPENDENT
AUDITOR AND THE CONDUCT
OF AN AUDIT IN
ACCORDANCE WITH PHILIPINE
STANDARDS ON
AUDITING
PSA 200
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Effective Date
This Standard is effective for audits of financial statements for
periods beginning on or after December 15, 2009.

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Purpose of An Audit of Financial


Statements
To enhance the degree of confidence of intended users in the
financial statements.
Achieved by the expression of an opinion by the auditor on
whether the financial statements are prepared, in all material
respects, in accordance with an applicable financial reporting
framework.

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Overall Objectives of the Auditor


(a) To obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement,
whether due to fraud or error, thereby enabling the auditor to
express an opinion on whether the financial statements are
prepared, in all material respects, in accordance with an
applicable financial reporting framework; and
(b) To report on the financial statements, and communicate as
required by the PSAs, in accordance with the auditors
findings.
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Requirements to An Audit of Financial


Statements
Ethical Requirements Relating to an Audit of Financial
Statements
Professional Skepticism
Professional Judgment
Sufficient Appropriate Audit Evidence and Audit Risk
Conduct of an Audit in Accordance with PSAs

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Ethical Requirements Relating to an Audit


of Financial Statements
Relevant ethical requirements ordinarily comprise Parts A and
B of the Code of Ethics for Professional Accountants in the
Philippines (the Code of Ethics) related to an audit of financial
statements together with national requirements that are more
restrictive.

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HOW MANY PARTS DOES THE CODE OF


ETHICS HAS?
ANSWER: THREE
PART A: GENERAL APPLICATION OF THE CODE
PART B: PROFESSIONAL ACCOUNTANTS IN PUBLIC
PRACTICE
PART C: PROFESSIONAL ACCOUNTANTS IN
BUSINESS

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Part A
The fundamental principles with which the auditor is required to
comply by the Code of Ethics are:
(a) Integrity;
(b) Objectivity;
(c) Professional competence and due care;
(d) Confidentiality; and
(e) Professional behavior.
Part B
Part B of the Code of Ethics illustrates how the conceptual
framework is to be applied in specific situations.
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Professional Skepticism
The auditor shall plan and perform an audit with professional skepticism
recognizing that circumstances may exist that cause the financial statements
to be materially misstated.
Professional skepticism includes being alert to, for example:
Audit evidence that contradicts other audit evidence obtained.
Information that brings into question the reliability of documents and
responses to inquiries to be used as audit evidence.
Conditions that may indicate possible fraud.
Circumstances that suggest the need for audit procedures in addition to
those required by the PSAs.
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Professional Judgment
Interpretation of relevant ethical requirements and the PSAs and
the informed decisions required throughout the audit cannot be
made without the application of relevant knowledge and
experience to the facts and circumstances.

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Professional judgment is necessary in


particular regarding decisions about:
Materiality and audit risk.

The nature, timing, and extent of audit procedures used to


meet the requirements of the PSAs and gather audit evidence.
Evaluating whether sufficient appropriate audit evidence
has been obtained, and whether more needs to be done to
achieve the objectives of the PSAs and thereby, the overall
objectives of the auditor.

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The evaluation of managements judgments in applying


the entitys applicable financial reporting framework.
The drawing of conclusions based on the audit evidence
obtained, for example, assessing the reasonableness of the
estimates made by management in preparing the financial
statements.

The exercise of professional judgment in any particular case is


based on the facts and circumstances that are known by the
auditor.
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Sufficient Appropriate Audit Evidence and


Audit Risk
It is cumulative in nature and is primarily obtained from audit
procedures performed during the course of the audit.
The sufficiency and appropriateness of audit evidence are
interrelated.
Sufficiency is for?
Quantity

Appropriateness is for?
Quality (Relevance and Reliability)

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Audit Evidence

ROMM

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Sufficient

Appropriate

Quantity

Quality

Quality

Relevance

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Reliability

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Reasonable (not absolute) Assurance


Inherent limitations of audit:

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The use of selective testing


The inherent limitations of internal control
Persuasive evidence rather than conclusive
The use of judgment
The characteristics of the subject matter

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Conduct of an Audit in Accordance with


PSAs
Comply with all PSAs relevant to the audit

Not represent compliance with PSAs unless complied all the


requirements of PSAs relevant
If the auditor cannot achieve its overall objectives, requires
modification to the auditors opinion or withdraw from the
engagement
Failure to achieve an objective represents a significant matter
requiring documentation
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Questions?

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