Activity Sheet - Module 3

1.)
 Auditing is a systematic process that examines financial records of an organization its
objectively obtaining and evaluating evidence of the subject matter to enable the auditors
to express an opinion whether the financial statements are prepared. It is allowing them to
give an independent opinion that provides assurance on the financial statements that it is
fairly represented for the intended users in helping them to decide to a certain outcome.

2.)
 Assertions are the set of representations by a management team that were
incorporated into the financial statements and accompanying disclosures that they
produced.

Examples of Assertions
 Transactions have been recorded at their actual amounts.
 Transactions have been appropriately presented within the financial statements and
accompanying disclosures.
 All transactions that should have been included in the financial statements have been
included.
 Transactions have been recorded within the correct accounting period.
 Balance sheet items existed as of the balance sheet date.
 The transactions summarized into the financial statements have occurred.
 All balance sheet items have been stated at their proper values.

3.)
  The criteria being used for a financial system audit is the measurement and evaluation of
the subject matter to express an independent opinion by the auditors to have an assurance
on fairly representation of financial statements.

4.)
 Accounting is about the process on how to make the financial statements and mostly done
by its own employees. While the auditing can be made by a third party and its process is
on examining the financial records to provide an opinion that gives credibility on the
financial statements.

5.)
 Yes, all audits are attestation as it gives assurance to every conclusion made by the
auditors through gathering evidence of checking the validity of every data needed for the
subject matter.

6.)
 Financial statements audit is the examination of an entity's financial statements and
accompanying disclosures by an independent auditor. Its objective is to provide an
opinion and gives fairness representation of the financial statements for the intended
users.
 An operational audit is an examination of the way an organization conducts business its
objective is to provide opinions on improvements needed internally to increase efficiency
and effectiveness.
 A compliance audit is an audit engagement in which the goal is to determine whether an
organization is adhering to the terms of a contract or certain rules and regulations.
 An external audit is an examination that is conducted by an independent accountant its
objective is to give credibility on the financial statements.
 Internal audit is about the process and controls in the managements that examines the
management performance to detect if there are breach in the internal controls.
 Government audits is examination of financial audits and performance audits of
government entities and entities that gives an assurance that it is fairly represented.
7.)
 The objective of financial statement audit is to provide an independent opinion that
shows that it is fairly represented and have been properly prepared in accordance with
accounting standards.

8.)
 Information risk audit is when the business is at risk by using the information that has no
assurance. To reduce the information risk is to prepare the financial statements in
accordance with general accepted accounting principles. It could also reduce by
performing risk assessment in the management.

9.)
 An audit report is a written report that has conclusion about the financial statements and
if it complies with the general accepted accounting principles and to make sure that the
financial records have a fair and accurate representation. The major categories to make up
an audit report is external audits to give credibility on the financial statements, internal
audits to examines the internal control of the business, and internal revenue service to
examines if the financial statements are reported correctly according to the tax laws and
to verify the reported amount of tax is correct.

10.)
 Due to the inherent limitations of audit, auditors were limits to only provide reasonable
assurance and not absolute assurance over the representation of financial statements. The
examples of inherent limitations are use of professional judgement, management
representations, risk of fraud, time constraints, independence threats, and etc.