审计Audit—Arens14ech06pptge.ppt

Audit Responsibilities and Objectives,Chapter 6,Learning Objective 1,Explain the objective of conducting an audit of financial statements and an audit of internal controls.,Objective of Conducting an Audit of Financial Statements,The overall objectives of the auditor are to obtain reasonable assurance about whether the financial statements 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 financial statements are prepared, in all material aspects, in accordance with applicable financial reporting framework (HKSA 200.11).,Steps to Develop Audit Objectives,Learning Objective 2,Distinguish managements responsibility for the financial statements and internal control from the auditors responsibility for verifying the financial statements and effectiveness of internal control.,Managements Responsibilities,Financial statements and internal controls.,Managements Responsibilities,As an auditor, what would you do in each of the following situations: 1. The client refuses to provide the fixed assets movement and said they do not use such schedule. As it is required by the auditors only, the auditors should prepare such schedule. 2. It is found that the audited financial statements has omitted a subsidiary. The client claims that the auditors have been negligent and threatens to sue the auditors.,Learning Objective 3,Explain the auditors responsibility for discovering material misstatements.,Objectives of the Auditor,Obtain reasonable assurance,Free from material misstatements,Financial statements,Opine,Applicable reporting framework,Financial statements,Report,Communicate per audit standards,Financial statements,Professional Skepticism,Material misstatements,Errors vs. Fraud,Reasonable Assurance,Auditors Responsibilities,Fraudulent reporting vs. theft of assets,Responsibilities for Discovering Illegal Acts,The auditor should obtain a general understanding of the legal and regulatory framework applicable to the entity and the industry and how the entity is complying with that framework (HKSA250.12). For example, capital adequacy and liquidity requirements for a bank. The auditors should obtain sufficient appropriate audit evidence about compliance with those laws and regulations generally recognized to have a direct effect on the determination of material amounts and disclosures in financial statements (HKSA250.13) For example, accrual for income taxes,Responsibilities for Discovering Illegal Acts,The auditor should request management to provide written representations that all known instances of non-compliance with laws and regulations has been disclosed to the auditor (HKSA250.16). In the absence of identified or suspected non-compliance, the auditor is not required to perform other audit procedures (HKSA250.17).,Responsibilities for Discovering Illegal Acts,The auditors should communicate with those charged with governance matters involving non-compliance with laws and regulations (such as the audit committee, the board of directors and senior management regarding noncompliance) (HKSA250.22). If the auditors suspect that members of senior management are involved in noncompliance, the auditors should report the matter to the next higher level of authority, such as audit committee or a supervisory board. Where no higher authority exists, seek legal advice (HKSA250.24).,Auditors Responsibilities for Discovering Illegal Acts,Direct-Effect,Same for errors and fraud,Indirect-Effect,No Assurance,Type,Responsibility,Learning Objective 4,Classify transactions and account balances into financial statement cycles and identify benefits of a cycle approach to segmenting the audit.,Financial Statements Cycles,Audits are performed by dividing the financial statements into smaller segments or components.,Transaction Flow Example,Relationships Among Transaction Cycles,General cash,Capital acquisition and repayment cycle,Sales and collection cycle,Acquisition and payment cycle,Payroll and personnel cycle,Inventory and warehousing cycle,Learning Objective 5,Describe why the auditor obtains a combination of assurance by auditing classes of transactions and ending balances in accounts, including presentation and disclosure.,Balance and Transactions Affecting Balances Example,Learning Objective 6,Distinguish among the three categories of management assertions about financial information.,Management Assertions,Assertions about classes of transactions and events for the period under audit,2. Assertions about account balances at period end,3. Assertions about presentation and disclosure,Management Assertions for Each Category of Assertions,Transactions and Events,Account Balances,Presentation and Disclosure,Occurrence,Existence,Occurrence and rights and obligations,Completeness,Completeness,Completeness,Accuracy,Valuation and allocation,Accuracy and valuation,Classification,Classification and understandability,Cutoff,Rights and obligations,Learning Objective 7,Link the six general transaction-related audit objectives to management assertions for classes of transactions.,Occurrence,Recorded transactions exist,Completeness,Existing transactions are recorded,Accuracy,Recorded transactions are stated at the correct amounts,General Transaction-related Audit Objectives,Classification,Transactions are properly classified.,Timing,Transactions are recorded on the correct dates.,Posting and summarization,Transactions are included in the master files and are correctly summarized.,General Transaction-related Audit Objectives,Hillsburg Hardware Co.,(Applied to Sales Transactions),Learning Objective 8,Link the eight general balance-related audit objectives to management assertions for account balances.,Existence,Amounts included exist,Completeness,Existing amounts are included,Accuracy,Amounts included are stated at the correct amounts,General Balance-related Audit Objectives,Classification,Amounts are properly classified,Cutoff,Transactions are recorded in the proper period,Detail tie-in,Account balances agree with master file amounts, and with the general ledger,General Balance-related Audit Objectives,Realizable value,Assets are included at estimated realizable value,Rights and obligations,Assets must be owned,General Balance-related Audit Objectives,(Applied to Inventory),Hillsburg Hardware Co.,Learning Objective 9,Link the four presentation- and disclosure-related audit objectives to management assertions for presentation and disclosure.,(Applied to Notes Payable),Hillsburg Hardware Co.,Learning Objective 10,Explain the relationship between audit objectives and the accumulation of audit evidence.,Why Learn Audit Objectives?,The company you are auditing has the following document / information flow related to the sales process Shipping documents Sale invoice monthly sales journal G/L F/S You ar