What is the Financial Statement Audit?
Top Financial Statements to Audit
These financial statements are the ones often utilized for audit purposesThe primary purpose of an audit is to conduct an independent and unbiased verification of all financial and non-financial material information to ensure that it is in line with what the management has reported.read more. However, some adjustments might be made to the statements by the company after the finalization of the audit for a better representation of facts. You are free to use this image on your website, templates, etc., Please provide us with an attribution linkArticle Link to be Hyperlinked If you want to learn more about Auditing, you may consider taking courses offered by Coursera –
Objectives of Financial Statement AuditThe objectives of a Financial Statement Audit-
Phases of an Auditing Financial StatementsLet’s discuss the following phases. You are free to use this image on your
website, templates, etc., Please provide us with an attribution linkArticle Link to be Hyperlinked #1 – Planning & Risk assessmentThe initial stage involves putting together an audit team and laying down general guidelines for effectively carrying out an audit. The next step is to determine any risks that could lead to material errors in the statements. Identifying such risks requires the auditor to have a thorough knowledge of the industry and business environment in which the company operates. #2 – Internal Controls TestingThis stage involves a critical analysis of internal controlsInternal control in accounting refers to the process by which a company implements various rules, policies, or procedures to ensure the accuracy of accounting and finance information, safeguard the various assets of the business, promote accountability in the business, and prevent the occurrence of frauds in the company.read more adopted by a company and their level of efficacy in eliminating any possibility of material misstatements in financial statements. These internal controls could include automated systems and processes employed by a company to ensure higher operational efficiency, safeguard assets, and ensure that all transactions are accurately reported. #3 – Substantive TestingAt this stage, the auditor looks for substantial evidence and cross-verification of facts and figures reported in the statements, which might include the following:
Responsibility for Financial Statements AuditBelow is the responsibility for the financial statements-
Scope of a Financial Statement AuditThe auditor decides the scope of his audit having regard to;
However, the terms of engagement cannot supersede the pronouncement of the institute or the provisions of relevant legislation. Importance
Limitations
Due to aforesaid inherent limitations, there is an unavoidable risk that some material misstatements may remain undetected. Basic Principles Governing a Financial Statement AuditBelow are some of the basic principles governing a financial statement audit.
Recommended ArticlesThis article has been a guide to the Financial Statement Audit. Here we discuss the meaning of a Financial Statement Audit, its importance, Objectives, Scope of the Audit, and principles governing the audit. You may learn more about basic accounting from the following articles –
What is the objective and general principles governing an audit of financial statements?1] Integrity, Independence and Objectivity
The auditor has to be honest while auditing, he cannot be favoring the organization. He must remain objective throughout the whole process, his integrity must not allow any malpractice. Another important principle is independence.
What are the basic principles governing an audit as per SA 200?The basic principles of auditing are confidentiality, integrity, objectivity, independence, skills and competence, work performed by others, documentation, planning, audit evidence, accounting system and internal control, and audit reporting.
What are overall objectives of an auditor as per ISA 200?The objective of an audit of financial statements is to enable the auditor to express an opinion2 whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework.
What are the objectives of SA 210?This Revised Standard on Auditing (SA 210) deals with the auditor's responsibilities in agreeing to the terms of the audit engagement with management. SA 210 establishes the preconditions for an audit, terms of an audit engagement and changes thereof, segregates the responsibility of the management and auditors etc.
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