Benefits of the Risk-Based Audit
Some of the benefits of the risk-based approach are summarised in the exhibit below. 风险导向性审计方法（risk-based approach）进行审计的一些好处在下面的展览中进行了总结。 Time Flexibility When Audit Work Needs to Be Performed Because risk assessment procedures do not involve the detailed testing of transactions and balances, they can be performed well before the period end, assuming no major operational changes are anticipated. […]
The International Standards on Auditing (ISAs)
Structure of the ISAs | 国际审计准则的结构 The ISAs have a standard structure, as outlined below. Introduction An explanation of the purpose and scope of the ISA, including how the ISA relates to other ISAs, the subject matter of the ISA, specific expectations on the auditor and others, and the context in which the ISA is […]
The Audit Process
The audit approach outlined in Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities (the Guide) has been divided into: This is illustrated in Exhibit 2.2-1 in the Guide. Notes: 1. Refer to ISA 230 for a complete list of documentation required. 2. Planning (ISA 300) is a continual […]
The Risk-Based Audit: Overview
The auditor’s overall objectives, as stated in ISA 200.11, can be summarised as follows: Reasonable Assurance Reasonable assurance is a high but not absolute level of assurance. It is obtained when the auditor has obtained sufficient appropriate audit evidence to reduce audit risk (that is, the risk that the auditor expresses an inappropriate opinion when […]
When doing a Risk Assessment on a client, what does an auditor look at?
Because risk is such a significant component of an audit, it is of the utmost significance that auditors approach risk evaluation with the utmost caution. The auditor is tasked with several overall objectives, one of which is to identify the risks that a company faces (both business risk and the risk of material misstatement) and […]
What is the concept of ‘Materiality’, and how is it applied in an Audit?
The word “materiality” basically means how important or significant something is in relation to the financial statements as a whole. ISA 320 Materiality in Planning and Performing an Audit says [defines] the following about the term: ‘A matter is material if its omission or misstatement would reasonably influence the economic decisions of users taken on […]
What happens when an Auditor finds a Material Error?
The ability of the auditor to express an opinion as to whether or not the financial statements reflect a true and fair view (or present fairly in all material respects) of the company’s financial situation is the fundamental objective of the audit. During the course of their work, the auditor is required to maintain a […]
How does the Auditor plan for an Audit of Financial Statements?
Planning an audit is one of the most integral parts of the audit. Without a sufficient planning programme on the auditor’s part, there is a significant risk that a material misstatement (or many material misstatements) will be missed. This will lead to the auditor expressing an inaccurate audit opinion, in addition to additional implications. Planning […]
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 […]
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 […]
