Objective of conducting an audit

of financial statements

The purpose of an audit is to provide financial

statement users with an opinion by the auditor on
whether the financial statements are presented fairly,
in all materials respects, in accordance with the
applicable financial accounting framework.
 Step to develop audit objective
Understand objectives and responsibilities for the audit
Divide financial statements into cycles
Know management assertions about financial statements
Know general audit objectives for classes of transactions, accounts and disclosures
Know specific audit objectives for classes of transactions, accounts and disclosures
 Managements responsibilities
&
•
Auditors responsibilities
Managements responsibilities:
• 1. the responsibility for adopting sound
accounting policies
• 2. maintaining adequate internal control
• 3. and making fair representations in the
financial statements rests with management
rather than with the auditors
• Auditors responsibilities:
• Explain the auditors responsibility for
discovering materials misstatements due
to fraud or error, and the need to maintain
professional skepticism when conducting
the audit.
• 1. materials versus immaterial misstatements
• 2. errors versus fraud
• 3. professional skepticism
• 5. aspects of professional skepticism
• 6. elements of professionals skepticism
• 7. auditors responsibilities for detecting material
errors
• 8. auditors responsibilities for detecting material
fraud
• 9. auditors responsibilities to consider laws and
regulations
 Financial statement cycles
• Cycle approach to segmenting an audit
1. Sales and collection cycle
2. Acquistion and payment cycle
3. Payroll and personnel cycle
4. Inventory and warehousing cycle
5. Capital acquisition and repayment cycle
Is nanti masukin tabel hal 169 yaa
Tabel 170 & 171, ok
 Relationships among cycles
Masukin tabel 6-5 halaman 173
 Setting audit objectives
• Transaction-related audit objectives
• Balance-related audit objectives
• Presentations and disclosure-related audit
objectives
 Management assertions
Management assertions are implied or expressed representations by
management about classes of transactions and the related accounts and
disclosures in the financial statements.

International Auditing Standards and AICPA auditing standards classify

assertions into three categories:
1. Assesrtions about classes of transactions and events for the period under
audit
2. Assertions about account balances at period end
3. Assertions about presentations and disclosures
Tabel halaman 175
 Transaction-related audit objectives
Tabel halaman 178
 Balance-related audit objectives
Tabel halaman 181
 Presentation and Diclosure-related
audit objective
Tabel hal 182
 How audit objective are met
Tabel hal 183