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 in the financial statements. Material inconsistency such inconsistencies that arise due to conflict between the information included in other information and […]
What are Subsequent Events as per Accounting and Auditing?
i-ask! | Have a question? Ask Tutor! What are subsequent events according to International Accounting Standards and International Auditing Standards? Is the meaning of subsequent events in accounting and auditing is same or different? Please elaborate the what is the difference between subsequent events according to accounting standards and subsequent events according to auditing standards […]
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 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 to gather sufficient appropriate audit evidence, auditor has to select the appropriate audit approach or audit methodology that promises 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 clear on this part than we are half way through. The next question is how auditor is going to obtain sufficient […]
What is Financial Statement Risk?
The term or concept with the name Financial Statement Risk has NOT been defined, at least, in International Standards on Auditing and not even in any other pronouncements issued by IAASB related to assurance engagements and related services. So it is possible that this term is from such pronouncements issued by other auditing boards. Most […]
What is Emphasis of Matter paragraph and when is it used?
Emphasis of matter paragraph, as the name suggests, is a paragraph that is included by the auditor in his report (audit report) to direct the attention of users of financial statements to a matter that has been discussed appropriately in the financial statements (usually a disclosure). The reason why auditor invites the attention of users […]
What is the difference between modified and unmodified audit report?
Audit report is said to be unmodified if auditor releases such report which has the exactly the same format or contents as are mentioned for the report which should be given if financial statements are giving true and fair view. Under IAASB auditing standard ISA 700 (read para 20 through 40), the format of the […]
Where can I find the glossary of auditing terms?
Auditing is one of the technical and practical subject so defining each term can be different from one perspective to other. For example, term defined in one definition might have completely different meanings in another standard. Also there are many different auditing boards around the world ranging from global to country wide organizations responsible for […]
What is Audit risk?
In IAASB auditing standards the term Audit risk has been defined as: The risk that auditor expresses an inappropriate audit opinion when the financial statements are materially misstated. Audit risk is a function of risk of material misstatement and detection risk. In simple words a risk that auditor expresses an opinion that financial statements are […]