INTRODUCTION TO AUDITING

Auditing
A systematic process of objectively obtaining and evaluating
evidence regarding selection and assertions about economic actions
and events to ascertain the degree of correspondence between those
assertions and established criteria and communicating the results to
interested users
Auditing
Overall objectives:
1. To obtain reasonable assurance about whether the FS as a
whole are free from material misstatement, whether due to
fraud or error, thereby enabling the auditor to express an
opinion on whether the FS are prepared, an all material
respects, in accordance with an applicable financial
reporting framework
2. To report on the FS, and communicate as required by the
PSAs, in accordance with the auditors findings
Auditing
Conditions that create demand for audit:
1. There is a potential conflict of interest between those
prepared information and those who use information.
2. Information can have potential economic consequences for
a decision maker.
3. Expertise if often required for preparing and verifying
information.
4. Users of information frequently are prevented from
directly assessing the quality of information.
Auditing
An audit conducted must have regard to the requirements of
1. PSAs
2. Relevant professional bodies
3. Legislation and regulations
4. Terms of the audit engagement and reporting requirements
Types of Audit
1. FS audit
2. Compliance audit
3. Management audit
4. Performance audit
5. Comprehensive audit
6. Operational audit
7. Internal audit
8. Environmental audit
9. Forensic audit
Types of Auditor

External Internal
Auditor Auditor

Government Forensic
Auditor Auditor
 Assurance Engagements and Related
Services
Nature Audit Review Agreed-Upon Compilation
Procedures
Objective To express and To enable the CPA To carry out audit To assist the client
opinion on the FS to report whether procedures agreed in the preparation
anything has come on with the client of the FS
to his attention that and any appropriate
would indicate that third parties
the FS are not indentified in the
presented fairly report
Level of assurance High or reasonable Moderate or none none
provided assurance limited assurance
 Assurance Engagements and Related
Services
Nature Audit Review Agreed-Upon Compilation
Procedures
Type of report Positive assurance Negative assurance Description of Identification of
issued procedures information
performed and compiled
factual findings
Basic procedures Risk assessment Inquiry and As agreed Assemble and read
procedures, test of analytical FS
controls and procedures
substantive tests
Independence Required Required Not required Not required
requirement