1

INTRODUCTION TO
AUDITING
 Learning Outcomes

After studying this chapter, you should be able to:

Differentiate between the different types of audit
Describe the auditing profession and its
requirements
Explain the framework in the auditing profession

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 Definition

 An audit is a complete and careful examination of

selected financial records of a business or person.

 At the end of an audit, auditors prepare a report of

their findings, where they express their opinions on
the truthfulness and fairness of the financial
statements, as well as whether the statements
comply with the required regulations and
accounting standards.

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 Differences between Auditing
and Accounting
Auditing Accounting
Framework International Auditing Malaysian Financial
Standards Reporting Standards

Malaysian Financial
Reporting Standards

Relevant Acts
Scope Provide opinion of Prepare financial
financial statements statements

Reporting structure Shareholders of client’s Management

company

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 Types of Auditor and Audit

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 Types of Auditor and Audit
(cont.)

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 Professional Scepticism

 Professional skepticism emphasizes having an

inquisitive mind, which means that auditors should
have a questioning mind when they encounter an
event or evidence.
 They should not be easily satisfied with one
observation, but instead delve deeper into the
matter to get the right answers.

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 Regulators of The Auditing
Profession
International Local
International Federation of Ministry of Finance
Accountants (IFAC)

International Accounting Standards Malaysian Institute of Accountants

Board (IASB)

The Institute of Internal Auditors

Malaysia (IIAM)

Securities Commission Malaysia

Bank Negara Malaysia (BNM)

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 The Demand for Auditing

 The audit market is broad and stretches over many

industries.
 Both the private and public sectors require auditing.
Financial statements of departments and ministries of
the federal government, as well as every department
under the state government are required to submit their
audited financial statements.
 So long as there are governing standards and bodies,
and financial statements of business entities are
required to be credible, audits will be necessary.

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