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Auditing and Assurance Principles PDF
Auditing and Assurance Principles PDF
Assurance
Principles
Jose M. Ireneo
Shirley C. Ireneo
George R. James
Chapter 1: Fundamentals of
Assurance Services
Summary of Leaning Objectives
.Assurance
.Refers to the auditors satisfaction as to the reliability of an
assertion being made by one party for use by another
party.
.Assurance engagements
.Are three-party contracts in which assurers (such as a
CPA) reports on the quality of information.
c) Suitable criteria
.Assertion-based assurance
engagements(attest engagement)
.Is an engagement in which a practitioner is
engaged to issue, or does issue, a written
communication that expresses a conclusion
about the reliability of a written assertion that
is the responsibility of another party.
1. Define Auditing
.Auditing
.Is 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 results to interested users.
2. Distinguish between auditing and accounting
.Objective of an audit
.Expression of an opinion on the fairness of such
financial statements
.Information risk
. the risk that information is misstated or misleading
.To reduce information risk, management of business
and the users of their financial statements may
adopt any or all of the following approaches:
.The unqualified audit report now consists of five paragraphs per PSA 700
(Revised)
.An audit cannot provide absolute assurance that the subject matter(for
example, the financial statements) is free of any fraud, or error.
.The following factors are reasons why an audit can provide a high ( but not
absolute) level of assurance:
a) The use of [selective] testing
b) The inherent limitations of any accounting and internal control systems
c) The fact that most audit evidence is persuasive rather than conclusive
d) The use of judgement
9. Appreciate how auditing has evolved
through human history