Tunku Puteri Intan Safinaz School of Accountancy

BKAA2013 Audit and Assurance 1

Second Semester 2019/2020 (A192)

Group G

Prepared For:
Lecturer’s Name

Dr. Ifa Rizad binti Mustapa

Prepared By:
Karthck A/L Rajanthiran (264601)
Rubiatul Adawiyah Binti Mohd Ashari (264831)
Nur Dayana Nisa Binti Hafizal (264743)
Nur Aisyah Binti Aminuddin (264278)
Muhammad Alif Firdaus Bin Aleheh Rosli (264580)

Date of Submission
8 March 2020
PAST YEAR QUESTION 2019/2020 (FIRST SEMESTER)

Question 1

(a) The objective of an audit of financial statement is to enable the auditor to express an opinion
whether the financial statement are prepared in all material respects, in accordance with an
identified reporting framework. If the auditors believe that the financial statements are not fairly
presented or are unable to reach the conclusion due to insufficient evidence, they are responsible
to notify the users through the audit report.

(b) (i) Material versus immaterial misstatements

Material misstatement is a difference between the amount, classification, presentation or disclosure

of a reported financial statement item and the amount, classification, presentation or disclosure that
is required for the item to be in accordance with the applicable financial reporting framework.

(ii) Reasonable assurance

Reasonable assurance is a high but not absolute because most audit evidence is a result from testing
a sample of a population, areas to be tested require significant auditor judgement and complex
estimates are affected by future events.

(iii) Error versus fraud

Error can be defined as unintentional misstatement while fraud is intentional misstatement and the
auditor’s responsibility is to identify and differentiate between the two because any action taken by
the auditor to correct these misstatements and the type of opinion issued shall depend heavily on
the type of misstatement.

(iv) Professional scepticism

An attitude that include a questioning mind, being alert to conditions which may indicate possible
misstatements due to error or fraud and a critical assessment of audit evidence (ISA 200).

(c) Auditor’s responsibility for detecting fraud is perform procedures to obtain information that is
used to identify the risk of material misstatement due to fraud. Other than that, auditor must
identify and assess the risks of material misstatement due to fraud at the financial statement level
and the assertion level and for those assessed risks that could result in a material misstatement due
to fraud, evaluate the design of the entity’s related controls, including relevant control activities and
to determine whether they have been implemented. Third, design and perform audit procedures to
respond to the risk of management override of control. Lastly, determine responses to address the
assessed risk of material misstatement due to fraud.

(d) The fundamental principles governing the auditor's professional ethics are integrity, objectivity,
professional competence and due care, confidentiality and professional behaviour.