Essay on chapter 1 auditing notes

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Assurance engagement: an engagement performed by an auditor or consultant to enhance the reliability of the subject matter.
Accountable relationship: situation in which one party is answerable to another for the subject matter.
Applicable financial reporting framework: IFRS, ASPE
Assertions: statements made by management regarding the recognition, measurement, and presentation and disclosure of items in the financial statement.
Audit evidence: info used by the auditor to support the audit opinion.
Audit file: the file where the evidence and documentation of the work performed is kept as a permanent record to support the opinion issued.
Audit plan: the list or description of audit procedures to be performed.
Audit risk: risk that the auditor may express an inappropriate opinion. This means the auditor may indicate that the financial statements aren’t materially misstated where in fact they are.
Financial statements: a structured representation of historical financial information, including the related notes.
Independent auditor’s report: auditor’s formal expression of opinion on whether the financial statements are in accordance with the applicable financial reporting framework.
Internal control: processes implemented and maintained by management to help the entity achieve its objectives.
Material: an amount or disclosure that is significant enough to make a difference to a user.
Limitations of a financial statement audit arise from the nature of audit procedures (if auditor doesn’t have access to all relevant info or evidence maybe withheld), and the need for the audit to be conducted within a reasonable period of time and at a reasonable cost.
Compliance audits: An audit to determine whether the entity has conformed with regulations, rules or processes
Operational audits: an assessment of the economy (inputs like wages and materials), efficiency, and effectiveness of an organization’s operations.
Comprehensive audits: an audit that encompasses a range of audit and audit-related activities, such as a financial statement audit, operational audit, and compliance audit.
Internal audits: an independent service within an entity that generally evaluates and improves risk management, internal control procedures, and elements of the governance process.
Function of internal audits are determined by those charged with governance, generally the BODs, and may include management of an entity.
Corporate social responsibility (CSR): a range of activities undertaken voluntarily by a corporation; CSR disclosures include environmental, employee, and social reporting.
Consulting firms: non-audit firms that provide assurance services on non-financial information, such as corporate social responsibility and environmental disclosures.
Different levels of assurance:
Reasonable assurance: provides high but not absolute assurance on the reliability of the subject matter
Moderate assurance: provides negative assurance on the reliability of the subject matter. Auditor has done work to believe that the information being assured isn’t worthy of belief.
Review engagement: engagement in which the auditor does adequate work to report whether or not anything came to their attention that would lead them to believe that the information being assured is not fairly presented. This is requested when client requires assurance but doesn’t require audit level of assurance. In conducting this, auditor will obtain an understanding of entity under review, identify potential material misstatements where effort should be concentrated; and conduct analytical procedures, enquiries of entity personnel, and other tasks to aid the formulation of their report.
No assurance: results when auditor completes a set of tasks requested by the client and reports factually on the results of that work to the client.
e.g. of no assurance is compilation engagement: engagement in which an auditor compiles a set of financial statements based on the
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