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...

What is Sampling risk in auditing?

In order to express an opinion, auditor needs sufficient appropriate audit evidence. To obtain audit evidence, auditor applies range of audit procedures. But due to limited time and resources and also to conduct...

What is the difference between Due Care and Due Diligence in auditing?

In IESBA Code of Ethics for Professional accountants, one of the fundamental principles is the principle of Professional competence and due care. Practitioner (auditor) is required to conduct assurance engagement with due care which ultimately...

What is the difference between Material Misstatement and Material Inconsistency?

Material misstatement refers to such misstatements if present in the financial statements then the financial statements may affect the economic decisions of the users of financial statements. Material misstatements relates to the information included...

Is audit an attestation engagement or direct reporting engagement?

Audit engagement is an attest or attestation engagement rather than direct reporting engagement. As the purpose of audit engagement is to enhance the degree of users of financial statements which is achieved by the...

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...

What is the difference between Audit Procedure and Audit Methodology?

First of all lets agree on the point that auditor is required to obtain sufficient appropriate audit evidence to form reasonable conclusions and on the same conclusions auditor base his opinion. If we are...

What is meant by deviation from controls?

Simply put; an instance or activity that did not occur as per expectations is considered as deviation. For an activity it is not necessary that it must occur as per expectations but also non-occurrence...

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...

What is Directional testing?

Auditor gathers sufficient appropriate audit evidence to reduce audit to an acceptably low level and also the same audit evidence enables the auditor to reach reasonable conclusions which form the basis of auditor's opinion. Now...