Can an Auditor prepare the Financial Statements and then audit them?
Who is responsible for the preparation of the Financial Statements? Management is responsible for preparing and fairly presenting the financial statements under the applicable financial reporting framework. These responsibilities include: Accounting and bookkeeping services comprise a broad range of services, including: Accounting and bookkeeping services that are routine or mechanical: Examples of services that might […]
What are a ‘Hot’ and a ‘Cold’ file Review?
As discussed in this post titled “Who Inspects the Auditor’s work to ensure that they are doing it correctly?“, audit firms are frequently subjected to mandatory reviews of their audit work by either their professional body regulatory inspectors [The Audit Oversight Board (“AOB”)] or both. In addition, the audit firm may either be forced to […]
What are the Responsibilities of Auditors in relation to Fraud?
To start, it is not the responsibility of the auditor to either prevent or discover fraud within the entity that is being audited! Management and those charged with governance are the ones responsible for this task. However, this does not absolve the auditor of their responsibility to devise audit procedures based on their risk assessment […]
How do Accounting Standards interact with the work of an Auditor?
Accounting standards, such as the International Financial Reporting Standards (IFRS), Malaysian Financial Reporting Standards (MFRS) and Malaysian Private Entities Reporting Standard (MPERS), are among the most important components of a set of financial statements. 会计准则，如国际财务报告准则（IFRS）、马来西亚财务报告准则（MFRS）和马来西亚私营实体报告准则（MPERS），是一套财务报表的最重要组成部分。 As a result of its role in prescribing how the accounting treatment of material items should be handled within the […]
Who Inspects Auditor’s work to ensure that they are doing it correctly?
Statutory audit work is necessary for many jurisdictions (However, certain businesses may opt to have a voluntary audit, their financiers or investors may need an audit, or the entity’s Constitution may dictate that the financial statements must be audited). Audit firms will have to do internal reviews of their work. They will also be visited […]
What Terms have to be agreed upon between an Auditor and their Client?
It is crucial to the relationship that the auditor and the client agree on the terms of engagement before beginning their work together. In the absence of such terms, there is no clear understanding of responsibilities, and the absence of clear terms of engagement can generate a lot of issues both during the engagement and […]
What is an ‘Assurance Engagement’?
The International Auditing and Assurance Standards Board (IAASB) defines assurance engagements in the International Framework for Assurance Engagements as follows: “An engagement in which a practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a […]
What are the Overall Purpose and Main Features of an Audit?
The general objective of an audit is discussed in ISA 200 Overall Objective of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing. According to ISA 200, the following objectives must be met for an audit of financial statements to be considered successful: “To obtain reasonable assurance about […]
Can a Professional Accountant accept Gifts from a Client?
It is not uncommon for clients to offer gifts and/or hospitality to professional accountants (including auditors). Professional Accountants should ensure that accepting such gifts and hospitality does not violate the essential principles before doing so. The client’s offer of gifts and hospitality, its type and value, and the client’s overarching purpose all play a role […]
What happens if Family or Close Relationships exist between an Auditor and the Client?
Where family or close relationship ties between an auditor and their client, three different sorts of conflicts might arise that threaten the auditor’s independence and objectivity. These threats are as follows: Example: Self-Review Threat An accountant suggested a new strategy to an organisation she prepared the accounts for. She has since been asked to examine […]
