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Chap 4 : Audit - Coggle Diagram
Chap 4 : Audit
Auditing
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What Is Auditing?
Audit is a professional assessment by a competent and independent person of : entity's financial statements, internal control, organization, procedures,or transactions against a standard
Financial auditing is process of examining an organization’s financial records > determine if they are accurate and in accordance with applciable rule, regulations & law
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Conclusion
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Audit report = after the financial statement, the most important thing that shareholders look at.
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Audit Evidence
4 Steps
Which Sample Size? (→ ISA 530: Audit Sampling) = importance of cost -> benefit of auditing an additional transaction is decliningin the amount of transactions already audited.-> we must only review a sample of transactions (however some accounts could be based on the entire population)
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Which Audit Procedures To Use? (→ ISA 500: Audit Evidence) = 9 types -> auditors use a combination of these techniques -> everything is detailled in the audit programme
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infos
« International Standard on Auditing » (ISA) = explains what constitutes audit evidence in an audit of financial statements , deals with the auditor’s responsibility to design and perform audit procedures to obtain sufficient appropriate audit evidence -> auditor's opinion
ISA 500: Audit evidence includes both inofrmation contained in the accounting records underlying the financial statements and other information; evidence should be appriopiate (quality) & sufficient (quantity)
Audit Process
Client Acceptance or Continuance → Audit Planning → Risk Assessment → Substantive Procedures → Report.
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Materiality (ISA 320)
Information is material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements
depends on the size of the item or error judged in the particular circumstances of its omission or misstatement.