Professional Documents
Culture Documents
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
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)
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