What is the difference between Attestation engagement and Direct reporting engagement in auditing?
Before we discuss the difference between attestation engagement and direct reporting engagement, lets understand what is assurance engagement at first place. Assurance engagement is simply an engagement conducted by a practitioner at the end of which he expresses his opinion on the measurement of subject matter against a criteria. This opinion will ultimately enhance the degree of […]
What are different types of audit reports or auditor’s reports?
The nature and type of reports issued by the practitioner depends on the type of assurance engagement. However we will be speaking strictly in context of audit engagement as the question is about the types audit reports. We can classify audit reports in number of ways but usually audit reports are classified n TWO broad […]
What is Detection risk?
According to International Auditing Standards detection risk is defined as follows: The risk that the procedures performed by the auditor to reduce audit risk to an acceptably low level will not detect a misstatement that exists and that could be material, either individually or when aggregated with other misstatements. In simple words detection risk is […]
What is difference between full and reduced substantive testing?
First of all lets clear out few things which are essential for this question to be answered. Latest ISAs are based on business risk approach to conduct an audit engagement and requires the auditor to use this approach to design and apply audit procedures. The question of whether to apply full substantive procedures or detailed […]
What is the difference between Inherent Risk and Business Risk and implications of these two in auditing?
Understanding the difference between these two terms and other risk related terminologies is vital if students want to acquire the conceptual understanding of the Risk-based Audit approach. According to the glossary accompanying the IAASB pronouncements on assurance engagement and related Services business risk has been defined as follows: A risk resulting from significant conditions, events, […]
What is the difference between Internal Control Questionnaires (ICQ) and Internal Control Evaluation Questionnaires (ICEQ)?
Internal controls questionnaires (ICQ) and Internal controls evaluation questionnaires (ICEQ) are basically two modes of documenting entity’s internal control system while auditor applies risk assessment procedures and tests of controls. Both serve different purposes and thus are distinct from each other. However, which one to use depends on auditor’s understanding of the entity, the risk […]
What is the difference between Internal Audit Function and Internal Control System?
Let’s refresh some important areas before we get to the answer to this question so that no room is left for confusions. I will be having a quick go through each topic that is relevant. Users require financial statements to fulfill their information needs and in order to reach good decisions they must have accurate […]
What is Audit Evidence?
IAASB auditing standards use professional code of ethics issued by International Ethical Standards Board of Accountants (IESBA) to describe the ethical requirements for conducting an audit. However, accountancy bodies all over the world have their own ethical standards for their members working as accounting and auditors. One common requirement in every ethical standard is that […]
How sequentially numbered vouchers help auditors?
First of all let’s clear our confusions about the term Voucher itself. Voucher is any document on which an information about the business activity is recorded and the same is approved/authenticated/authorized by the relevant person in the management. Thus voucher is any document that proves that a particular transaction did happened and the person responsible […]