Audit week 1 Flashcards
What is the role of internal audit in an organization?
Internal audit provides independent assurance on risk management, control, and governance processes within an organization.
What are tests of internal controls?
These are procedures performed by auditors to evaluate the effectiveness of a company’s internal controls in preventing and detecting errors or fraud.
What is materiality in auditing?
Materiality refers to the threshold at which misstatements in financial statements could influence the economic decisions of users.
What are post-balance sheet events, and why are they relevant to audits?
Post-balance sheet events are events occurring after the reporting date but before the audit report is issued. They can affect financial statement accuracy and require disclosure or adjustment.
What is the importance of going concern in auditing?
Auditors assess whether a company is likely to continue operating for the foreseeable future. If doubts exist, disclosures or modifications in the audit report may be required.
What does an auditor’s report typically include?
It includes the auditor’s opinion on financial statements, whether they are free from material misstatement, and if they comply with relevant financial reporting standards.
How does an audit add credibility to financial statements?
An audit enhances reliability by providing independent assurance that financial statements present a true and fair view, increasing trust among investors and stakeholders.
