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Unit 1. External Audit-Kos
Unit 1. External Audit-Kos
EXTERNAL
AUDIT
BASIS
CONCEPTS
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4.1. DEFINITION
GENERAL DEFINITION:
– A PERIODIC EXAMINATION OF THE BOOKS OF
ACCOUNT AND RECORDS OF AN ENTITY.
– IT IS CARRIED OUT BY AN INDEPENDENT THIRD
PARTY (THE AUDITOR)
– IF THE BOOKS OF ACCOUNT ARE ACCURATE AND
COMPLY WITH ESTABLISED CONCEPTS, PRINCIPLES,
ACCOUNTING STANDADS, LEGAL REQUIREMENTS
AND GIVE A TRUE AND FAIR VIEW OF THE FINANCIAL
STATE OF THE ENTITY
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4.1. DEFINITION
THE OBJECTIVE OF AN AUDIT OF FINANCIAL
STATEMENTS IS TO EXPRESS AN OPINION WHETHER
THE FINANCIAL STATEMENTS ARE PREPARED, IN ALL
MATERIAL RESPECTS, IN ACCORDANCE WITH AN
APPLICABLE FINANCIAL REPORTING FRAMEWORK.
AUDITING IS UNDERSTOOD:
– AS THE ACTIVITY,
– PERFORMED BY A QUALIFIED, INDEPENDENT PERSON,
– CONSISTING OF ANALYSIS, USING APPROPIATE REVIEWING
AND VERIFICATION TECHNIQUES, OF THE ECONOMIC-
FINANCIAL INFORMATION OBTAINED FROM THE
ACCOUNTING EXAMINED.
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4.1. DEFINITION
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4.2. GENERAL METHODOLOGY OF
AUDITING PROCESS
STRATEGY OF WORK>
Objective and configuration
Size and complexity of company
The auditor experience
Knowledge of the type of the business
Quality of the organization
Internal Control of the organization
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4.2. GENERAL METHODOLOGY OF
AUDITING PROCESS
PLANIFICACION OF AUDITING
Scope, configuration and exact date of the beginning of the work
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4.2. GENERAL METHODOLOGY OF
AUDITING PROCESS
AUDITING PROGRAM
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4.3. PLANNING ACTIVITIES
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4.3. PLANNING ACTIVITIES
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4.3. PLANNING ACTIVITIES
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4.3. PLANNING ACTIVITIES
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4.4. ENGAGEMENT LETTER
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4.4. ENGAGEMENT LETTER
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4.5. AUDITOR’ S OPINION
THE AUDITOR IS RESPONSIBLE FOR FORMING AND
EXPRESSING A “TECHNICAL OPINION” ON THE
FINANCIAL STATEMENTS WITH REFERENCE TO THE
FOLLOWING PARTICULARS:
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4.5. AUDITOR’ S OPINION
– WHETHER FAILURE TO APPLY ONE OR SEVERAL
ACCOUNTING PRINCIPLES OR RULES IS CONSIDERED
FITTING, IN APPROPIATE, WITHIN THE TRUE IMAGE THE
ANNUAL ACCOUNTS MUST PROVIDE.
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4.5. AUDITOR’ S OPINION
THE DIFERENTS KINDS OF TECHNICAL OPINION COULD
BE:
– “QUALIFIED OPINION”: WHEN THERE ARE NO RESERVES
IN THE PARTICULAR STATE OF THE PREVIOUS POINTS.
– “UNQUALIFIED OPINION” OR “ADVERSE OPINION”: WHEN
THE RESERVES EXIST.
– “DISCLAIMER OF OPINION”: WHEN THERE ARE IMPORTANT
RESERVES ABOUT THE DIFERENT PREVIOUS POINTS AND
IT IS NECESSARY COMPLEMENTARY DETAILS AND
INFORMATION ABOUT THE ANNUAL ACCOUNTS.
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4.6. AUDITING REPORT
THE TECHNICAL OPINION MUST STATE WHETHER THE
ACCOUNTING STATEMENTS OR DOCUMENT
ADEQUATELY REPRESENTS THE ECONOMIC EVENTS
THAT HAVE ARISEN AT THE COMPANY OR BODY THAT
THESE MUST CONTAIN ACCORDING TO THE APPLICABLE
ACCOUNTING RULES AND PRACTICE.
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4.6. AUDITING REPORT
AUDIT REPORT: THE FORMAL DOCUMENT IN WHICH AN
AUDITOR EXPRESSES AN CLEAR OPINION AS TO
WHETHER THE FINANCIAL STATEMENTS OF AN ENTITY:
– SHOW A TRUE AND FAIR VIEW OF:
ITS POSITION AT A GIVEN DATE AND
THE RESULTS OF ITS OPERATIONS FOR THE ACCOUNTING
PERIOD ENDED ON THAT DATE
– HAVE BEEN PROPERLY PREPARED IN ACCORDANCE WITH
THE RELEVANT STATUTORY REQUIREMENTS.
– COMPLIANCE WITH CONTRACTUAL AGREEMENTS.
– SUMMARIZED FINANCIAL STATEMENTS.
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4.6. AUDITING REPORT
EVALUATION ABOUT THE FINANCIAL STATEMENTS> IT
INCLUDES>
– THE ACCOUNTING POLICIES SELECTED AND APPLIED ARE
CONSISTENT WITH THE FINANCIAL REPORTING
FRAMEWORK.
– THE ACCOUNTING ESTIMATES MADE BY MANAGEMENT
ARE REASONABLE.
– THE INFORMATION PRESENTED IN THE FINANCIAL
STATEMENTS IS RELEVANT, RELIABLE, COMPARABLE AND
UNDERSTANDABLE.
– THE FINANCIAL STATEMENTS PROVIDE SUFFICIENT
DISCLOSURES TO ENABLE USERS TO UNDERSTAND THE
EFFECT OF MATERIAL TRANSACTION AND EVENTS.
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4.6. AUDITING REPORT
AUDIT REPORT: MERCANTILE DOCUMENT. IT CONTAINS:
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4.6. AUDITING REPORT
– WHETHER FINANCIAL STATEMENTS CONTAIN ALL THE
NECESARY AND SUFFICIENT INFORMATION TO INTERPRET
AND UNDERSTAND THE FINANCIAL SITUATION
– TECHNICAL OPINION.
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4.6. AUDITING REPORT
ELEMENTS OF THE AUDITOR’ S REPORT *ISAS*>
– TITLE
– ADDRESSEE
– INTRODUCTORY PARAGRAPH
– MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL
STATEMENTS
– AUDTOR’S RESPONSIBILITY
– AUDITOR’S OPINION
– OTHER REPORTING RESPONSIBILITIES
– AUDITOR’ S SIGNATURE
– DATE OF THE AUDITOR’S REPORT
– AUDITOR’S AFFRESS
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4.6. AUDITING REPORT
WHEN THE ANNUAL ACCOUNTS ARE DEPOSITED AT THE
BUSINESS REGISTRY, THEY SHALL BE ACCOMPANIED,
WHEN APPROPIATE, BY THE AUDITOR´S REPORT.
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