Assurence

Compare the primary auditor objectives in auditing historical financial statements to auditing internal controls over financial reporting. Identify at least two (2) objectives that are the most significant in reducing the risk of reporting errors or misstatements in financial statements. Provide a rationale for your response.

Q1. What is the link between audit risk and engagement risk? How does the audit risk model allow the auditor to deal with these risks in the most cost effective manner?

1. What is the purpose of financial statement analysis? The purpose of financial statement analysis is to provide information used by the business, potential creditors and investors.

The auditor must review disclosures for adequacy, and if the auditor concludes that information disclosures are not reasonably adequate, the auditor must state so in the auditor’s

14. In which paragraph of the standard audit report does the auditor communicate to the user that certain combining fund information in the financial statements is not part of the basic financial statements, but that such information has been subjected to auditing procedures and, in his or her opinion, is fairly presented in all material respects in relation to the basic financial statements?

The main purpose of the financial statements is to provide creditors and investors with a summary of a business financial activity. All statements are prepared at certain times throughout the year. The balance sheet reports liabilities, assets, and owner equity of the company. The income statement matches incurred expenses during a period of generated revenue. The statement of retained earnings reports retained earnings from net loss and net incomes from

Relevant professional standards for this assignment are AU Section 230 “Due Care in the Performance of Work,” AU Section 326 “Evidential Matter,” AU Section 330 “The Confirmation Process,” and AU Section 339 “Audit Documentation.”

Independent audit in turn makes the financial statements more credible and reliable source of information

To begin the review process there should be some knowledge of the processes and procedures in the accounting department. It may be a good idea to observe all of the procedures that go into creating the financial statements. Look for any weaknesses or questionable practices and create a list of questions. Then in the next phase the auditor can conduct interviews to get a better understanding of the accounting staff. Observations and interviews can set the groundwork and provide information into any nuances or potential fraud or abuse. Any material weaknesses found can be further explored.

This was designed to show accuracy of financial data and confidence because of adequate controls that safeguarded the financial data. End of year financial reports were also required to contain an assessment of the effectiveness of the internal controls. The issuer's auditing firm is required to attest to that assessment, after reviewing controls, policies, and procedures during a Section 404 audit, conducted along with a traditional financial audit (Thomas & Klutz, n.d.).

The main purpose of financial accounting is to prepare financial reports that provide information about a firm’s performance to external parties such as investors, creditors, and tax authorities. Must be performed according to GAAP (Generally Accepted Accounting Principles) guidelines.

Abernethy and Chapman’s engagement team comprises of a partner-in-charge, a manager, a senior auditor, and one or more staff auditors. The partner-in-charge leads the engagement team and is responsible for all final decisions made while conducting the audit. The manager, senior auditor, and staff auditors are to perform the actual audit examination. The engagement team’s responsibility is to complete the audit with competency and objectivity.

The purpose of an audit is to enhance of confidence in the financial statements. An auditors opinion validates this purpose.

Assurance- deals wth objective examination of independent assessment on governance risk management and so forth. Checking to see if everything is going well within the company.

A company prepares financial statement to provide information about its financial position and performance. This information is in turn used by a wide range of stakeholders (such as investors, banks, customers, suppliers etc) in making economic decisions with respect to respective economic interest in the company. Typically, in terms of ownership by investment in shares of the company, shareholders though own the company but do not manage it. Therefore, the shareholder and other such stakeholders to get comfort in taking sound decision need independent assurance from the auditors that the financial statements reflect true and fair view of the company affairs in all material respects. Hence, in order to enhance the level of