What is Audit around the computer?
Audit around the computer means that processing done by the computer system needs not to be audited as auditor expects that sufficient appropriate audit evidence can be obtained by reconciling inputs with outputs. In simple words evidence is drawn and conclusions are reached without considering how inputs are being processed to provide outputs. Sometimes it […]
Why auditors may fail to detect fraud?
Primary responsibility to prevent and detect fraud is upon management or those who are charged with an authority of management oversight (also known as those charged with governance). To achieve this objective it is their responsibility to have an effective internal control system in place which not detect fraudulent activities but also prevent them from […]
What is meant by sufficient appropriate audit evidence and how is it obtained?
It is the responsibility of the auditor to obtain reasonable assurance by conducting audit engagement and expressing his opinion in the audit report. This expression of opinion results in reasonable assurance which is conveyed to users of financial statements via audit report. However, to form audit opinion, auditor is required to stay objective and he […]
What is meant by inherent limitations of audit and what are these?
Inherent limitations are such features of audit that constrains the auditor to obtain absolute assurance. It is because of these inherent limitations of audit the practitioner cannot assure the users of financial statements that financial statements are absolutely free of (material) misstatements. As a result of these limitations auditor is expected provide reasonable assurance which […]
What is meant by Significant Matters in auditing?
Significant matters are such matters that give risk to special audit consideration, treatment, conclusion or opinion. What is significant matter is not clearly defined in International Standards on Auditing (ISAs) and therefore what amounts to significant matter while conducting audit engagement is left over the auditor to decide by exercising his professional judgement. While deciding […]
What is meant by Assertions in audit or auditing?
Assertions or management assertions in audit or auditing simply means what management claims. For example, if a management states that internal controls are effective then it is a claim or assertion made by management. Similarly, it is primarily the responsibility of the management of the entity to prepare financial statements in which all the assets, […]
What is assurance engagement?
Assurance engagement is an engagement performed by a practitioner to enable himself to express an opinion about the measurement of subject matter against a criteria. Practitioner’s expression of opinion raise the confidence of the users over the measurement as to whether measurement of subject matter is a fair statement keeping the criteria applicable under consideration. Replacing the formal […]
What is an Assurance engagement in auditing?
Assurance engagement is an engagement performed by a practitioner to enable himself to express an opinion about the measurement of subject matter against a criteria. Practitioner’s expression of opinion raise the confidence of the users over the measurement of subject matter subject to the criteria applicable under consideration. To summarize the above formal definition, read through the […]
What is the difference between Hot and Cold reviews in auditing?
According to ISQC 1 it is the objective of the firm to establish and maintain a system of quality control to provide it with reasonable assurance that: The firm and its personnel comply with professional standards and applicable legal and regulatory requirements; and Reports issued by the firm or engagement partners are appropriate in the […]
What is the difference between negative assurance and positive assurance?
Positive assurance is a positive assertion or in other words when opinion is stated in “positive form”. On the other hand, negative assurance is simply an opinion expressed in negative wordings. We call negative assurances negative because of the sentence structure. Sentences that contain NOT in them are called negative sentences or negation But such […]