The Audit Function --

An Overview

(Attestation)

Auditing DefinedAuditing Defined#1 #1 A systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.

Auditing Concepts Committee,American Accounting Association, “Report of the Committee on Basic Auditing Concepts,” The Accounting Review, 1971

Auditing DefinedAuditing Defined#2#2

The accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria. Auditing should be done by a competent independent person.

Arens & Loebbecke, Auditing, An Integrated Approach 7th Edition - Prentice Hall, 1997.

Generally Accepted Auditing Standards

General Standards• Competency (Training and

proficiency)

–In criteria

–In obtaining and evaluating evidence

–In reporting

• Independence

• Due care

Generally Accepted Auditing Standards

Fieldwork Standards• Planning and

supervision

• Internal control structure

• Sufficient, competent evidence

Plan

Generally Accepted Auditing Standards

Reporting Standards

• Existing criteria (e.g. generally accepted accounting principles)

• Inconsistency

• Inadequate disclosure

• Expression of Opinion

Other Types of Audits

Compliance Audits• Financial Audits

• Performance Audits Internal Audits Operational Audits

Types of Audit Reports

Correspondence

YES

YES, but...

NO

DON’T KNOW

Types of Audit Reports

Unqualified Opinion• Standard Report• Modified Report

Qualified Opinion• Scope Qualification• GAAP Departure

Qualification Adverse Opinion

Disclaimer of Opinion

Correspondence

YES

YES, but...

NO

DON’T KNOW