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Flashcards in Week 1 Deck (21):
1

Objective of Auditing

Verification of Information

2

“The objective of a financial statement audit is for the auditor to express an opinion about whether the financial statements are prepared in all material respects in accordance with a financial reporting framework.”

Objective of F/S Audits

3

Causes of Information Risk

We are drowning in data
Remoteness of information
Complex exchange transactions
Competing incentives
Reliability
Voluminous data

4

Different Assurance Services

Financial Statement

5

Different Assurance Services: Financial Statement

Planning / Execution / Report
Sufficient & appropriate evidence; then unmodified opinion
Limitations

6

Different Assurance Services:
Compliance

Are the applicable rules, policies, procedures are being followed
Ex.: tax legislation, company hiring practices

7

Different Assurance Services: Operational

How well is the entity operating
Also known as: value for money, performance or efficiency audits Ex.: provincial auditor general

8

Different Assurance Services: Internal

Vary widely; usually elements of governance process
Purpose determined by those charge with governance
Own profession

9

Corporate social responsibility (CSR)

Include environmental, employee and social
Voluntary
Ex. Carbon emissions information

10

Different Levels of Assurance

Reasonable
Moderate
None

11

Different Levels of Assurance: Reasonable

High but not absolute
Ex. External audit of a financial statement

12

Different Levels of Assurance: Moderate

Negative assurance – “nothing came to our attention”
Ex. Review engagement

13

Different Levels of Assurance: None

Complete a set of tasks & report factually on the results
Ex. Compilation Engagement

14

Responsibilities of Accountant (Preparer)

Information included in their financial statements are:
Relevant
Reliable
Comparable
Understandable
Fair presentation

15

Responsibilities of Auditor

Will form their opinion using:
Professional scepticism
Professional judgement
Due Care

16

Regulators and Regulations

Standard Setters:
AASB which is governed by AASOC
Other Bodies:
CSA
CPAB made up of CSA, CPA & OSFI
Legacy Practitioners
CICA (77,000 members)
CGA (75,000 members)
CMA (50,000 members)

17

Expectation Gap Between Customers and Auditors

Accurate: No Errors

Fairly Stated: No Material Errors

18

Lack of Understanding (3 types)

Business Failure
Audit Failure
Audit Risk

19

Business Failure

Recession
Unexpected competition
Poor Mgmt Decisions

20

Audit Failure

Inappropriate supervision
Insufficient evidence
Lack of competence

21

Audit Risk

Not 100% confident
Sampling
Well-concealed frauds