Auditing and Assurance - an Overview

Material misstatement shall be treated and assessed by the auditors as significant risks. And the auditor shall gather an understanding of the entity’s

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?

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 auditor must obtain a sufficient understanding of the entity and its environment, including its internal control, to assess the risk of material misstatement of the FS whether due to error or fraud and to

Section 404 of the act requires that the auditor attest to and issue a report on management’s assessment of internal control over financial reporting. To express an opinion on internal controls, the auditor obtains an understanding of and performs tests of controls related to all significant account balances, classes of transactions, and disclosures and related assertions in the financial statements (Arens, 2010).

Confirmation is the process of obtaining and evaluating a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions. It describes the concept of assessing inherent and control risks, determining the acceptable level of detection risk, and designing an audit program to achieve an appropriately low level of audit risk. The auditor uses the audit risk assessment in determining the audit procedures to be applied, including whether they should include confirmation. The greater the combined assessed level of inherent and control risk, the greater the assurance that the auditor needs from substantive tests related to a financial statement assertion.

The audit work has been performed according to the original or a modified audit plan;

The purpose of the Auditors report was to check the conformance of the Company financial report;

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.).

e. “The auditor considers the level of assurance, if any, he wants from substantive testing for a particular audit objective and decides, among other things, which procedure, or combination of procedures, can provide that level of assurance. For some assertions, analytical

3. What potential implications arise for the accounting firm if they issue an unqualified report without the going-concern explanatory paragraph?

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.

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.