04 Introduction To Auditing Compress 1

Page 1 of 11 | AUD Handout No.
04
INTRODUCTION TO AUDITING
RAYMUND FRANCIS A. ESCALA, CPA, MBA
INTRODUCTION TO AUDITING AND OVERVIEW

OF THE AUDIT PROCESS
RAYMUND FRANCIS A. ESCALA, CPA MBA
AUDITING
Definition
As defined by the American Accounting Association, an audit 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 thereof.
The following are key concepts obtained from the definition of an audit:
a. A systematic process
b. It involves objectively obtaining and evaluating evidence about assertions.
c. It ascertains the degree of correspondence between assertions and established criteria
d. It includes communication of the results to interested users
Types of audit
In compliance with the syllabus in Auditing of the Philippine CPA Licensure Examination, the following are the types of
audit.
1. Nature of assertion or data
a. Financial statement (FS) audit
b. Operational audit
c. Compliance audit
2. Types of auditor
a. External audit
b. Internal audit
c. Government audit
Comparison of the different types of audit

Financial Statements Audit Operational Audit Compliance Audit
Assertions Financial statements are fairly Operations are conducted Activities complied with
presented efficiently and effectively applicable laws, rules,
regulations, contracts or
management policy
Suitable Criteria GAAP or any other identified Objective set by the Applicable contracts, rules,
financial reporting framework management regulations, laws or
management policy
Report An opinion whether the financial Report on efficiency and Degree of compliance with
statements are fairly presented effectiveness. This will also applicable laws, rules,
in conformity with an identified include recommendations to regulations, or management
financial reporting framework improve operations. policy.
Generally External auditors Internal auditors Government auditors
performed by
REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

www.realexcellenceonline.com.ph REAL EXCELLENCE ONLINE CPA REVIEW
(074) 665 6774 0916 840 0661 admin@reo.com.ph MAY 2023 CPA REVIEW SEASON
0 0
Page 2 of 11 | AUD Handouts No. 04

FINANCIAL STATEMENT AUDIT

Objective of financial statement audit
PSA 120 dictates that the objective of an audit of financial statements is to enable the auditor to express an opinion
whether the financial statements are prepared, in all material respects, in accordance with generally accepted accounting
principles or other identified financial reporting framework.
PSA 200 (Revised and Redrafted) further supported the above objective by stating that “in conducting an audit of financial
statements, the overall objectives of the auditor are:
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 auditor’s
findings.”
From these statements, the following key phrases were emphasized:
➢ Expression of an opinion
➢ Financial statements are taken as a whole
➢ Reasonable assurance
➢ In all material respects
➢ Presence of criteria
➢ Communication of the results
Review of elements of FS audit

A. A three-party relationship
The table below summarizes the parties, with their respective responsibilities, involved in a financial statement audit.
Parties Responsibilities
Auditor (represents the ✓ formation and expression of an opinion on the financial statements
practitioner) ✓ compliance with ethical requirements (e.g. independence and competence)
✓ determining the scope of audit in accordance with PSAs and other applicable
regulations of professional bodies
Management and those ✓ preparation and presentation of the financial statements in accordance with the
charged with governance applicable financial reporting framework
(represents the responsible ✓ prevention and detection of fraud and error
party) ✓ adoption of implementation adequate accounting and internal control systems
Users of FS (represent the ✓ use the audit report which contains the opinion expressed by the auditor
intended users
B. An appropriate subject matter

For the financial statements to be appropriate subject matter of an audit engagement, adequate supporting records
and documents should be available.
C. Suitable criteria
Criteria used in audit of financial statements generally include the PFRS, GAAP and other applicable financial
reporting framework
D. Sufficient appropriate evidence

Concepts discussed in assurance engagements apply to audit engagements. Terms are revised to specifically relate
to audit engagements (e.g. assurance engagement risk is changed to audit risk)

0 0

E. A written assurance re port or conclusion.

The auditor provides a written report called “audit report” which contains the conclusion or opinion conveying the
assurance obtained about the financial statements. In addition, the auditor considers other reporting responsibilities,
including communicating with those charged with governance.
The opinion to be expressed by the auditor depending on the evidence obtained may include either of the following:
Type Common phrase used
Unmodified or unqualified ✓ Presents fairly, in all material respect
Qualified ✓ Except for
Adverse ✓ Do not present fairly, in all material respect
Disclaimer of opinion ✓ We do not express a conclusion
To warrant the issuance of an unmodified opinion, the auditor determines whether there is
a. a limitation on the scope of the auditor’s work (Qualified or Disclaimer of Opinion); or
b. a disagreement with management regarding the acceptability of the accounting policies selected, the method of
their application or the adequacy of financial statement disclosures. (Quali fied or Adverse Opinion)
Assurance provided by the auditor
The auditor’s opinion is intended to enhance the credibility of financial statements by providing a high, but not
absolute, level of assurance.
Reasonable assurance and the inherent limitations of an audit
a. Use of selective testing
b. Inherent limitations of internal control
c. Fact that most of audit evidence is persuasive rather than conclusive
d. Work undertaken by the auditor to form opinion is permeated by judgment
e. Nature/characteristics of assertions
THE DEMAND FOR FS AUDIT

A. Management of the following
1. Business risk
Countless number of decisions is made each and every day by businesses in order to appropriately manage
business risk, which is any event or activity that will prevent the entity in meetin g its business objectives such as
wealth and profit maximization. If an entity is exposed to a very significant business risk, such risk may ultimately
lead the entity to fail. This is the primary reason why decisions to be made must be carefully evaluated and should
be founded on suitable basis.
Furthermore, investors, creditors, and other users of financial information demand high-quality, relevant, and
reliable information in order to come up with educated financial decisions.
2. Information risk
Information risk the risk that the information prepared and presented by the entity contains misstatement.
Information risk is the mathematical complement of reliability level. This means that as information risk increases
(from 5% to 10%), reliability level dec reases (from 95% to 90%).
Factors contributing to information risk
➢ Voluminous data
➢ Complexity of transactions
➢ Remoteness of information
➢ Conflicts of interest between the provider and users of information
Ways of reducing information risk
➢ Verify the information
➢ Have the financial statements be audited
➢ Share information risk with the management

0 0

B. Additional conditions creating the need for FS Audit

• Conflict of interest between the responsible party and the intended users of the financial statements
• Expertise. Complexity of accounting and auditing requires expertise
• Remoteness of users. Users of information frequently are prevented from directly assessing the quality of
information
• Financial consequence. Misleading financial information could have substantial economic consequences for a
decision maker.
VALUE OF FS AUDIT
Based from the discussions of the demand for FS audit, the following may be construed as the value of a FS audit
• Audit reduces information risk that may lead to lower cost of capital.
• Audit may be used to deter inefficiency and fraud.
GENERAL PRINCIPLES OF AN FS AUDIT

Whenever FS audit are conducted, the following principles must be observed:
1. The auditor should comply with relevant ethical requirement (Code of Ethics).
2. The auditor should conduct an audit in accordance with Philippine Standards on Auditing.
3. The auditor should plan and perform the audit with an attitude of professional skepticism.
4. The auditor should exercise professional judgment.
5. The auditor should obtain sufficient appropriate audit evidence.
THEORETICAL FRAMEWORK OF FS AUDIT

Efforts had been made to formally create a conceptual structure for auditing financial statements. The conceptual
structure would include conditions that should exist whenever FS Audit is conducted to have a favorable result.
The following are some of the assumptions, postulates or concepts included in this conceptual structure:
1. All financial data are verifiable through existence of supporting documents and records
2. Auditor should always maintain independence with respect to the financial statements under audit
3. No long-term conflict between the auditor and the client’s management
4. Audit benefits the public
5. Effective internal control system reduces the possibility of errors and fraud
AUDIT PROCESS: A GENERAL APPROACH

A general overview of the audit process may be best represented by the following diagram:
Entity prepares The auditor The auditor The auditor

and presents performs audit gathers audit expresses an
financial procedures evidence audit opinion
statements
1. Entity prepares and presents financial statements

The financial statements are considered as assertions or representation made by the entity, through its
management and those charged with governance, as appropriate. These assertions may be explicitly or implicitly
included in the financial statements and may fall into the following categories ( TAP):
1. Assertions about classes of Transactions and events for the period under audit (TOCCAC):
✓ Occurrence - transactions and events that have been recorded have occurred and pertain to the entity.
✓ Completeness - all transactions and events that should have been recorded have been recorded.
✓ Cutoff - transactions and events have been recorded in the correct accounting period.
✓ Accuracy - amounts and other data relating to recorded transactions and events have been recorded
appropriately.

0 0

✓ Classification - transactions and events have been recorded in the proper accounts.
2. Assertions about Account balances at the period end ( ACERV):
✓ Completeness - all assets, liabilities and equity interests that should have been recorded have been recorded.
✓ Existence - assets, liabilities, and equity interests exist.
✓ Rights and obligations - the entity holds or controls the rights to assets, and liabilities are the obligations of the
entity.
✓ Valuation and allocation - assets, liabilities, and equity interests are included in the financial statements at
appropriate amounts and any resulting valuation or allocation adjustments are appropriately recorded.
3. Assertions about Presentation and disclosure ( POCAC):
✓ Occurrence and rights and obligations - disclosed events, transactions, and other matters have occurred and
pertain to the entity.
✓ Completeness - all disclosures that should have been included in the financial statements have been
included.
✓ Accuracy and valuation - financial and other information are disclosed fairly and at appropriate amounts.
✓ Classification and understandability - financial information is appropriately presented and described, and
disclosures are clearly expressed.
2. The auditor performs audit procedures

In conducting an audit of financial statements, the overall objectives of the auditor are:
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 auditor’s
findings.
To achieve the overall objectives of the audit, the auditor shall design and perform audit procedures which enable the
gathering of audit evidence. Procedures to be performed may be categorized into (1) major audit procedures and (2)
specific audit procedures.
Major audit procedures

1. Risk assessment procedures. The audit procedures performed to obtain an understanding of the entity and its
environment, including the entity’s internal control, to identify and assess the risks of material misstatement,
whether due to fraud or error, at the financial statement and assertion levels.
2. Test of controls. An audit procedure designed to evaluate the operating effectiveness of controls in preventing,
or detecting and correcting, material misstatements at the assertion level.
3. Substantive procedure. An audit procedure designed to detect material misstatements at the assertion level.
Substantive procedures comprise:
i. Tests of details (of classes of transactions, account balances, and disclosures), and
ii. Substantive analytical procedures.
Specific audit procedures

1. Inspection of Records or Documents. It consists of examining records or documents, whether internal or
external, in paper form, electronic form, or other media.
2. Inspection of Tangible Assets. It consists of physical examination of the assets.
3. Observation. It consists of looking at a process or procedure being performed by others.
4. Inquiry. It consists of seeking information of knowledgeable persons, both financial and non-financial, throughout
the entity or outside the entity. This procedure may be used extensively throughout the audit as a complement of
other audit procedures.
5. Confirmation. A specific type of inquiry that is the process of obtaining a representation of information or of an
existing condition directly from a third party.

0 0

6. Recalculation. It consists of checking the mathematical accuracy of documents or records. This procedure may
be performed manually or electronically.
7. Reperformance. It involves the auditor’s independent execution of procedures or controls that were originally
performed as part of the entity’s internal control.
8. Analytical Procedures. Procedures consist of evaluations of financial information made by a study of plausible
relationships among both financial and non-financial data. Analytical procedures also encompass the
investigation of identified fluctuations and relationships that are inconsistent with other relevant information or
deviate significantly from predicted amounts.
3. The auditor gathers audit evidence

Through the procedures performed, the auditor obtains sufficient appropriate audit evi dence to be able to draw
reasonable conclusions on which to base the audit opinion.
4. The auditor expresses an audit opinion

The auditor provides a written audit report containing a conclusion or an opinion regarding the fairness of preparation
and presentati on of financial statements in accordance with the applicable financial reporting framework.
Opinion to be expressed by the auditor may include either of the following:
a. Unmodified opinion.
b. Modified opinion. The auditor modifies the opinion in the auditor ’s report when:
1. A choice between Qualified and Adverse. The auditor concludes that, based on the audit evidence obtained,
the financial statements as a whole are not free from material misstatement; or
2. A choice between Qualified and Disclaimer of opinion. The auditor is unable to obtain sufficient appropriate
audit evidence to conclude that the financial statements as a whole are free from material misstatement.
AUDIT PROCESS: A MORE DETAILED APPROACH

The specific sequence or order of activities in performing financial statements audit may vary from firms to firms
depending on their own policies and procedures. However, such sequence of different activities normally will include the
following steps:
PHASE DESCRIPTION
1. Preliminary This phase will require a decision from the auditor whether or not to accept a new client or
engagement continue relationship with an existing one. This process would require evaluation not only of the
activities auditor’s qualification, but also the integrity and auditability of t he client’s financial statements.
2. Planning an audit Audit planning involves the development of an overall audit strategy, audit plan and audit program.
of financial The auditor usually obtained more detailed knowledge about the client’s business and industry in
statements order to understand the transactions and events affecting the financial statements.
Preliminary assessment of risk and materiality is also made during this phase.
3. Study and Since entity’s internal control directly affects the reliability of the financial statements, it is
evaluation of appropriate to study and evaluate these controls.
internal control
4. Evidence- Using the information obtained in audit planning and consideration of internal controls, the auditor
gathering performs substantive test to determine whether entity’s financial statements are presented fairly in
(Substantive accordance with financial reporting standards. Substantive procedures could either be analytical
testing) procedures or test of details of transactions and balances
This phase will always be performed by the auditor.
5. Completing the Wrapping-up procedures are performed; conclusions reached are reviewed; and an overall opinion
audit is formed during this phase.

0 0

6. Issuance of the In this stage, auditor prepares and issues audit report which describes the scope of the audit and
audit report states the auditor’s conclusion regarding the fairness of the financial statements.
7. Post-audit After completion of the audit engagement, auditor performs procedures that will enable him/her
responsibilities identify areas for improvement in the current and future engagements.
ILLUSTRATIVE QUIZZERS – PART 1

1. Which of the following statements refers to the definition of auditing?
A. A service activity which function is to provide quantitative information primarily financial in nature about economic
entities that is intended to be useful in making economic decisions.
B. The art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and
events which are in part at least of a financial character and interpreting the results thereof.
C. The process of identifying, measuring and communicating economic information to permit informed judgment and
decisions by users of the information.
D. 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 thereof.
2. Which of the following is not among the characteristics of auditing?
A. A systematic process
B. It involves objectively obtaining and evaluating evidence about assertions.
C. It ascertains the degree of correspondence between assertions and established criteria
D. It includes communication of the results to the management
3. The predominant type of attestation service performed by CPAs is
A. Audit C. Compilation
B. Review D. Management consulting
4. Which of the following types of auditing is performed most commonly by CPAs on a contractual basis?
A. Internal auditing C. BIR auditing
B. Government auditing D. External auditing
5. These audits are similar in most respects.
A. Operational and compliance C. Financial and compliance
B. Operational and government D. Financial and operational
6. Which is incorrect regarding internal auditing?
A. It encompasses both financial and operational auditing.
B. An internal audit department reports to the audit committee and senior management.
C. It provides assistance primarily to management and those charged with governance.
D. It can be performed only by internal auditors.
7. To operate effectively, an internal auditor must be independent of
A. The line functions of the organizations
B. The entity
C. The employer-employee relationship which exists for other employees in the organization
D. All of the above
8. To provide for the greatest degree of independence in performing internal auditing functions, an internal auditor most
likely should report to
A. Board of Directors. C. Vice-President for Finance.
B. Corporate Controller. D. Corporate Stockholders.

0 0

9. The scope and objectives of internal auditing vary widely and depend on the size and structure of the entity and the
requirements of its management. Ordinarily, internal auditing activities include one or more of the following:
A. B. C. D.
Review of the accounting and internal control Yes Yes Yes Yes
systems
Examination of financial and operating Yes Yes Yes No
information
Review of the economy, efficiency and Yes Yes No No
effectiveness of operations
Review of compliance with laws, regulations and Yes No No No
other external requirements
10. Which statement is correct regarding the relationship between internal auditing and the external auditor?
A. Some judgments relating to the audit of the financial statements are those of the internal auditor.
B. The external audit function's objectives vary according to management's requirements.
C. Certain aspects of internal auditing may be useful in determining the nature, timing and extent of external audit
procedures.
D. The external auditor is responsible for the audit opinion expressed, however that responsibility may be reduced by
any use made of internal auditing.
11. This type of audit involves a review of an organization’s procedures and methods for the purpose of evaluating
efficiency and effectiveness of operations, identifying areas for improvement, and making recommendations to
improve performance.
A. Financial statement audit C. Compliance audit
B. Operational audit D. Internal audit
12. Operational auditing is primarily oriented toward
A. Future improvements to accomplish the goals of management.
B. The accuracy of data reflected in management’s fi nancial records.
C. The verification that a company’s financial statements are fairly presented.
D. Past protection provided by existing internal control.
13. An objective of operational audit is to assess whether
A. Specific units of the entity are functioning effectively and efficiently
B. Financial statements fairly reflect the results of operations
C. An organization’s procedures adheres to specific procedures, rules or regulations set by an authoritative body
D. Internal control structure is designed and implemented
14. AAA Corp. has engaged a public accounting firm to issue a report on the accuracy of product quality
specifications included in trade sales agreements. This is an example of a (an):
A. Financial statement audit C. Compliance audit
B. Attestation service D. Operational audit
15. Which of the following terms best describe the audit of a taxpayer’s return by a BIR auditor?
A. Operational audit C. Compliance audit
B. Internal audit D. Government audit
16. The overall objectives of the auditor in conducting an audit of financial statements are
I. To obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether caused by fraud or error.
II. To report on the financial statements.
III. To obtain conclusive rather than persuasive evidence.
IV. To detect all misstatements, whether due to fraud or error.
A. I and II only C. I, II and III only
B. II and IV only D. I, II, III and IV

0 0

17. Which of the following best describes the objective of an audit of financial statements?
A. To express an opinion whether the financial statements are prepared in accordance with prescribed criteria.
B. To express an assurance as to the future viability of the entity whose financial statements are being audited.
C. To express an assurance about the management's efficiency or effectiveness in conducting the operations of
entity.
D. To express an opinion whether the financial statements are prepared, in all material respect, in accordance with
an identified financial reporting framework.
18. The objective of the ordinary audit of financial statements is the expression of an opinion on:
A. the fairness of the financial statements. C. the accuracy of the annual report.
B. the accuracy of the financial statements. D. the balance sheet and income statement.
19. In "auditing" accounting data, the concern is with
A. Determining whether recorded information properly reflects the economic events that occurred during the
accounting period.
B. Determining if fraud has occurred.
C. Determining if taxable income has been calculated correctly.
D. Analyzing the financial information to be sure that it complies with government requirements.
20. Third-party users of the audit report expect the auditor to do all of the following except:
A. To evaluate measurements and disclosures made by management
B. To provide a biased evaluation of the FSs
C. To determine whether financial statements are presented in accordance with GAAP
D. To gather sufficient evidence to support their opinion
ILLUSTRATIVE QUIZZERS – PART 2

1. Management of a company is responsible for
A. Hiring the auditor C. The audit workpapers
B. Preparing the financial statements D. Independence and obtaining evidence
2. The term that describes the role of persons entrusted with the supervision, control and direction of an entity is
A. Management C. Governance
B. Administration D. Government
3. If the auditor believes that the financial statements are not fairly stated or is unable to reach a conclusion because of
insufficient evidence, the auditor:
A. should withdraw from the engagement.
B. should request an increase in audit fees so that more resources can be used to conduct the audit.
C. has the responsibility of notifying financial statement users through the auditor’s report.
D. should notify regulators of the circumstances.
4. The auditor’s best defense when material misstatements are not uncovered is to have conducted the audit:
A. in accordance with auditing standards.
B. as effectively as reasonably possible.
C. in a timely manner.
D. only after an adequate investigation of the management team.
5. The concept of reasonable assurance indicates that the auditor is:
A. not an insurer of the correctness of the financial statements.
B. not responsible for the fairness of the financial statements.
C. responsible only for issuing an opinion on the financial stateme nts.
D. responsible for finding all misstatements.
6. Absolute assurance cannot be provided in an audit because of: (Choose the exception)
A. Human errors in judgment C. The need to obtain conclusive evidence
B. The employment of test procedures D. Limitations inherent in the client’s internal controls

0 0

7. The need for an independent audit arises due to the following reasons. (Choose the expectation)
A. Expertise of auditors C. Remoteness of users
B. Competing inte rests D. Complexity of decision-making
8. Which of the following statements does not describe a condition that creates a demand for auditing?
A. Conflict between an information preparer and a user can result in biased information.
B. Information can have substantial economic consequences for a decision maker.
C. Expertise is often required for information preparation and verification.
D. Users can directly assess the quality of information.
9. Which of the following is incorrect regarding the general principles of an audit?
A. The auditor should comply with the "Code of Ethics for Professional Ethics for C ertified Public Accountants"
promulgated by the Philippine Professional Regulation Commission.
B. The auditor should conduct an audit in accordance with PSAs.
C. The auditor should plan and perform an audit with an attitude of professional skepticism recognizing that
circumstances may exist that cause the financial statements to be materially misstated.
D. The auditor would ordinarily expect to find evidence to support management representations and assume
they are necessarily correct.
10. Which is not a theoretical postulate framing an audit?
A. Financial data can be subjected to verification.
B. Long-term conflict between the auditor and client may exist.
C. An audit benefits the public.
D. The auditor is independent of the client.
11. Auditing is based on the assumption that the financial data are verifiable. Data are verifiable when two or more
qualified individuals,
A. Working together, can prove, beyond doubt, the accuracy of the data.
B. Working independently, each reach essentially similar conclusions.
C. Working independently, can prove, beyond reasonable doubt, the truthfulness of the data.
D. Working together, can agree upon the accuracy of the data.
12. Which of the following is not one of the three categories of assertions?
A. Assertions about classes of transactions and events for the period under audit
B. Assertions about financial statements and correspondence to GAAP
C. Assertions about account balances at period end
D. Assertions about presentation and disclosure
13. Which of the following is not a financial statement assertion relating to account balances?
A. Completeness. C. Rights and obligations.
B. Existence. D. Valuation and competence.
14. If a short-term note payable is included in the accounts payable balance on the financial statement, there is a violation
of the:
A. completeness assertion. C. cutoff assertion.
B. existence assertion. D. classification and understandability assertion.
15. Set the following phases in proper order:
i. Pre-Engagement
ii. Internal Controls
iii. Evidence-Gathering
iv. Planning
v. Post-Audit Responsibilities
vi. Reporting
A. i, ii, iii, iv, v, vi C. i, iv, iii, ii, v, vi
B. i, iv, ii, iii, vi, v D. i, iv, ii, iii, v, vi

0 0

16. Acts to be performed in order to obtain audit evidence.

A. Audit standards C. Audit procedures
B. Audit program D. Audit strategy
17. Audit procedures performed to obtain an understanding of the entity and its environment, including its internal control,
and to assess the risks of material misstatements at the financial statement and assertion levels.
A. Risk assessment procedures C. Substantive procedures
B. Tests of control D. Analytical procedures
18. Audit procedures to test the operating effectiveness of controls in preventing or detecting and correcting material
misstatements at the assertion level.
A. Risk assessment procedures C. Substantive procedures
B. Tests of control D. Analytical procedures
19. An auditor may achieve audit objectives related to particular assertions by:
A. Performing analytical procedures. C. Adhering to a system of quality control.
B. Preparing audit documentation. D. Increasing the level of detection risk.
20. If a company’s external auditor expresses an unqualified opinion as a result of the audit of the company’s financial
statements, readers of the audit report can assume that
A. The external auditor found no fraud
B. The company is financially sound and the financial statements are accurate
C. Internal control is effective
D. All material disagreements between the company and the auditor about the application of accounting principles
were resolved in the satisfaction of the external auditor.
"You may only succeed if you desire succeeding; you may only fail if you do not mind failing."
Philippos
--- END ---

0 0

04 Introduction To Auditing Compress 1

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

04 Introduction To Auditing Compress 1

Uploaded by

Copyright:

Available Formats

Page 1 of 11 | AUD Handout No.

INTRODUCTION TO AUDITING AND OVERVIEW

Comparison of the different types of audit

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

RAYMUND FRANCIS A. ESCALA, CPA MBA

FINANCIAL STATEMENT AUDIT

Review of elements of FS audit

B. An appropriate subject matter

D. Sufficient appropriate evidence

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

RAYMUND FRANCIS A. ESCALA, CPA MBA

E. A written assurance re port or conclusion.

THE DEMAND FOR FS AUDIT

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

RAYMUND FRANCIS A. ESCALA, CPA MBA

B. Additional conditions creating the need for FS Audit

GENERAL PRINCIPLES OF AN FS AUDIT

THEORETICAL FRAMEWORK OF FS AUDIT

AUDIT PROCESS: A GENERAL APPROACH

Entity prepares The auditor The auditor The auditor

1. Entity prepares and presents financial statements

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

RAYMUND FRANCIS A. ESCALA, CPA MBA

2. The auditor performs audit procedures

Major audit procedures

Specific audit procedures

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

RAYMUND FRANCIS A. ESCALA, CPA MBA

3. The auditor gathers audit evidence

4. The auditor expresses an audit opinion

AUDIT PROCESS: A MORE DETAILED APPROACH

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

RAYMUND FRANCIS A. ESCALA, CPA MBA

ILLUSTRATIVE QUIZZERS – PART 1

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

RAYMUND FRANCIS A. ESCALA, CPA MBA

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

RAYMUND FRANCIS A. ESCALA, CPA MBA

ILLUSTRATIVE QUIZZERS – PART 2

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

RAYMUND FRANCIS A. ESCALA, CPA MBA

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

RAYMUND FRANCIS A. ESCALA, CPA MBA

16. Acts to be performed in order to obtain audit evidence.

--- END ---

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

You might also like