Auditing

• Financial Audit: A financial audit is conducted to determine the accuracy and reliability of financial statements and to ensure compliance with accounting standards and regulations.
• An unqualified audit report is issued when the financial statements are free from material misstatements.
• Audit reports are prepared by the auditor to communicate their findings, opinions, and conclusions about the financial statements being audited.
• The auditor's report is the final product of an audit.
• Compliance Audit: An assessment of an organization's adherence to laws, regulations, and internal policies.
• Operational Audit: An operational audit evaluates the efficiency and effectiveness of an organization's operations, including its internal controls and risk management processes.
• A qualified audit report is issued when the auditor expresses a limitation of scope or there is a departure from generally accepted accounting principles.
• An unqualified opinion indicates that there were no material modifications or errors found during the audit process.
• An adverse audit report is issued when the financial statements are materially misstated and not in accordance with the applicable financial reporting framework.
• Operational Audit: An operational audit evaluates the efficiency, effectiveness, and economy of an organization's operations and processes.
• Compliance Audit: A compliance audit checks whether an entity complies with laws, rules, or procedures related to its activities.
• Regulatory Compliance Audits are performed by regulatory agencies to assess compliance with specific requirements.
• A qualified audit report is issued when there are material misstatements or deviations from generally accepted accounting principles (GAAP).
• Operational Audit: Evaluates the efficiency and effectiveness of operations within an organization.
• Operational Audit: Evaluates the efficiency and effectiveness of operations within an organization.
• Operational Audit: Evaluates the efficiency and effectiveness of operations within an organization.
• Disclaimer of Opinion: If the auditor cannot obtain sufficient evidence to support their opinion on the financial statements, they may issue a disclaimer of opinion.
• Disclaimer of Opinion: If the auditor cannot obtain sufficient evidence to support their opinion on the financial statements, they may issue a disclaimer of opinion.
• Disclaimer of Opinion: If the auditor cannot obtain sufficient evidence to support their opinion on the financial statements, they may issue a disclaimer of opinion.
• The purpose of an audit report is to inform users of the financial statements about the auditor's opinion on the fairness of presentation and compliance with applicable laws and regulatory requirements.
• Assurance services


  Independent professional services that are intended to enhance the credibility of information to meet the needs of an intended user
• Audit of historical financial statements

  Services designed to express an opinion on the fairness of historical financial statements based on the results of an audit
• Compilation of financial information

  The preparation of financial statements or the collection, classification, and summarization of other financial information
• Examination of prospective financial information is not an assurance service
• Suitable criteria


  • Reliable - contribute to clear, comprehensive, and consistent conclusions
  • Relevant - allow reasonably consistent evaluation or measurement
  • Neutral - contribute to conclusions that are free from bias
  • Sufficiently complete - contribute to clear, comprehensive, and consistent conclusions
• Subject matter information


  The outcome of the evaluation or measurement of a subject matter against criteria
• Positive assurance engagement


  The practitioner expresses a positive form of conclusion
• Negative assurance engagement


  The practitioner expresses a negative form of conclusion
• Evidence in an assurance engagement


  • Sufficiency is the measure of the quantity
  • Appropriateness is the measure of the quality (reliability and persuasiveness)
  • Reliability is influenced by the source, not the nature
  • Obtaining more evidence cannot compensate for poor quality
• Assurance engagement risk


  The risk that the practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated
• Reducing assurance engagement risk to zero is very rarely attainable or cost beneficial due to the use of selective testing, evidence being persuasive rather than conclusive, the practitioner may not have the required knowledge and skills, and the use of judgment
• Adverse opinion: An adverse opinion is given by an auditor if they believe that the company's financial statements do not accurately represent its true position, such as due to fraudulent activities.
• Philippine Framework for Assurance Engagements

  Contains basic principles, essential procedures, and related guidance for the performance of assurance engagements
• Adverse opinion: An adverse opinion is given by an auditor if they believe that the company's financial statements do not accurately represent its true position, such as due to fraudulent activities.
• Adverse opinion: An adverse opinion is given by an auditor if they believe that the company's financial statements do not accurately represent its true position, such as due to fraudulent activities.
• A qualified audit report is issued when there are material departures or omissions that affect the overall conclusion of the audit.
• PSRE 2400 (Engagements to Review Financial Statements)


  Applies to reviews of historical financial or other information by a practitioner other than the entity's auditor
• A qualified audit report is issued when there are material departures or omissions that affect the overall conclusion of the audit.
• Forensic Audit: A forensic audit investigates suspected fraud or other irregularities within an organization, often involving legal proceedings.
• Compilation engagement


  • The accountant is required to obtain a general knowledge of the business and operations of the entity, but not required to assess internal controls, make inquiries to assess reliability and completeness, or verify matters and explanations