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INTERNATIONAL AUDITING OVERVIEW

Aisa Tri Agustini, SE., M.Sc., CPA
HISTORY OF AUDITING
Mesopotamian Times
The Christian Era
(3000 BC)

The Latin meaning

Auditor= hearer or listener
The Importance of Auditing

Management
Responsibility to enhance
Credibility,
Usefulness, and
value of financial
statement
 What is an audit?
a systematic process of objectively obtaining and
evaluating evidence regarding assertions about
economic actions and events to ascertain the degree of
correspondence between these assertions and
established criteria and communicating the result to
interested users.
THE GOAL OF AUDIT
PROCESS
TO EXPRESS AND
INFORM THE CREDIBLE
OPINION IN AUDIT
REPORT.

give a true and fair view or

present fairly in all material
respects the financial
position of the company
GENERAL PRINCIPLES GOVERNING
AN AUDIT OF FINANCIAL
INFORMATION

AUDIT

FINANCIAL NON-FINANCIAL
BS
IS
FINANCIAL COMPLIANCE WITH THE
STATEMENT CF COMPANY POLICIES
NT
REQUIREMENT OF FINANCIAL
STATEMENT AUDIT
ETHICAL REQUIREMENTS
(INDEPENDENT)

PROFESSIONAL SCEPTICISM

MATERIALLY MISSTATED

PROFESSIONAL JUDGEMENT

SUFFICIENT APPROPRIATE
AUDIT EVIDENCE
 OBJECTIVE, PURPOSE, ADN
CHARACTERISTIC OF FINANCIAL
STATEMENT AUDIT
1
TO OBTAIN REASONABLE ASSURANCE ABOUT
WHETHER THE FINANCIAL STATEMENTS AS A WHOLE
ARE FREE FROM MATERIAL MISSSTAMENET
2
TO REPORT ON THE FINANCIAL STATEMENT AND
COMMUNICATE AS REQUIRED BY THE ISA BASED ON
AUDITOR’S FINDING

TO ENHANCE THE DEGREE OF CONFIDENCE OF INTENDED

PURPOSE USERS IN THE FINANCIAL STATEMENT

OPINION
LIMITATION OF THE AUDIT

TESTING

INTERNAL CONTROL
SYSTEMS

PERSUASIVE EVIDENCE
RATHER THAN CONCLUSIVE
RISK IN FINANCIAL STATEMENT,
TRANSACTIONS, ACCOUNT
BALANCES AND DISCLOSURE

Classes Transactions,
Overall Financial
Account Balances,
Statements
and Disclosure

Entity Environment, Misstatement,

Economic fraud
Condition
TYPES OF AUDIT
Audit Financial examine the is it true and
Statement Financial Statement fair view?

measure the company is it effective

Operational Audit
performance and efficience?

is the
measure the organisations
compliance of an following the
Compliance Audit entity on specific procedures,
procedures, rule, rule, or
regulations regulation?
TYPES OF AUDIT

EXTERNAL INTERNAL
AUDITORS AUDITORS
 SETTING AUDIT OBJECTIVES BASED
ON MANAGEMENT ASSERTIONS
Management’s Responsilibility

Financial Statement Assertion

Management must disclosed all that

should be disclosed
Audit

Opinion
Auditor’s Responsilibility
Assertions Categorised

Occurrence
Assertions
Completeness about classes
of
Accuracy transactions
and events for
Cut-Off the period
under audit
Classification
Assertions Categorised

Existence
Assertions
Right and Obligation about
account
Completeness balances at
the period
Valuation and Allocation end
Assertions Categorised

Occurence and right and obligation

Assertions
Completeness about
presentation
Classification and Understandability and
disclosure
Accuracy and Valuation
 4 Phases for Audit Process
Client Acceptance
Planning and Design of
An Audit Approach
Test for Evidence
Obtain sufficient audit evidence to
draw reasonable conclusion on
audit opinion
Completion of the Audit and
Issuance of an Audit Report
Audit firms must investigate the
business background, financial
statement, and industry of client
Audit firms must plan its work to
enable it to conduct an effective
audit in timely manner
The understanding controls is
needed to determine what kind of
test, timing, and extent should be.
Auditor should review
and assess the
conclusion drawn from
audit evidence
Final Procedures of Audit
Obtain Legal identify Carry out an Overall
Letters Subsequent Review

Review all Obtain management representation

material letter

Final analytical and Other Prepare matters for

Procedures attention of partners (MAP)
Audit Opnion
the Auditor’s satisfaction in
Unqualified
all material respects with
(Unmodified) Opinion
the matters

The Audit report should

Qualified (Modified)
state the reason in a clear
Opinion
and informative manner
International Audit Firms
 The Organisational Hierarchy of a
Typical International Auditing Firm

Director
Final decisions involving
or
Partner complex judgements
Owners of the firm
Responsible for determining the
audit procedures applicable to Manager
specific audit and uniform Supervises the audits
standards of field work conducted by the seniors
Major part of audit
planning and
Senior Accountants (Supervisor)
In charge of the audit fieldwork and typically have two conduct the audit
performs the or more years of experience in public auditing engagement
more detailed
routine audit Staff Accountant (Junior Assistant then Senior)
tasks First Position of someone entering the public accountant profession
W. W. Deloitte GeorgeTouche Nobuza Tohmatsu

FOUNDING FATHERS OF DELOITTE

Arthur Young Alwin C. Ernst

FOUNDING FATHERS OF
ERNST AND YOUNG (EY)
 PIETER SIR WILLIAM JAMES REINHARDT
KLIJNVELD BARCLAY PEAT MARWICK GOERDELER

FOUNDING FATHERS OF KPMG

 WILLIAM EDWIN SAMUEL
HOPKINS WATERHOUSE LOWELL PRICE
HOLYLAND

FOUNDING FATHERS OF
PRICEWATERHOUSECOOPERS
 “Education is the passport to the future, for
tomorrow belongs to those who prepare for it today”

–Malcolm X