Untitled Quiz

Study Notes

Auditors should have a professional skepticism attitude when conducting audits.
This involves being aware of potential risks of misstatement due to fraud or error.
Auditors should scrutinize audit evidence that contradicts other evidence obtained.
They should question the reliability of documents or management representations used as audit evidence.
Auditors should also identify circumstances that suggest the need for additional audit procedures.
While records and documents are accepted as genuine, auditors should investigate any reason to believe otherwise.
Auditors should assume neither dishonesty nor unquestioned honesty of management.

The term "true and fair view" is not formally defined in International Standards on Auditing (ISAs).
"True" relates to factual accuracy, while considering materiality—information should conform to required standards, regulations, and laws.
"Fair" pertains to the presentation of information and the viewpoint conveyed to the reader. Information should be free from bias.
Financial statements should reflect the commercial substance and reality of balances and transactions.
"View" implies professional judgment has been reached.
A degree of imprecision is inevitable due to inherent audit limitations.
A true and fair presentation signifies compliance with the applicable financial reporting framework.
When accounting choices exist, both choices provide a true and fair view if applied correctly.
The phrases “present fairly, in all material respects” and “give a true and fair view” are equivalent.

The audit process involves a continuous annual cycle of stages.
The Engagement Letter outlines the auditor's and management's duties and responsibilities.
Planning involves establishing an overall audit strategy and developing the audit plan.
Risk Assessment determines the nature, timing, and extent of audit procedures.
Internal control evaluation involves assessing the design of the internal control system.
Control Effectiveness testing verifies the operating effectiveness of internal controls.
Substantive Procedures verify material assertions related to balances, transactions, and disclosures.
Review and Finalization procedures ensure audit evidence supports the audit opinion.
Management Representations are obtained from management to acknowledge responsibilities and support audit evidence.
The Auditor's Report is signed after directors approve the financial statements.

Reasonable assurance engagements provide a high level of assurance, reducing assurance engagement risk to an acceptably low level.
This requires objective subject matter and criteria, and independent, reliable, and persuasive evidence.
Limited assurance engagements provide a lower level of assurance, expressing a conclusion in the negative form.
They are appropriate for subjective subject matter and criteria where evidence may not be fully independent or reliable.
Limited assurance engagements are often used for reviews of historical financial information and non-financial matters.
Reasonable assurance cannot be provided in situations where the subject matter or criteria are subjective or evidence is insufficient.
Reviews of historical financial information provide limited assurance through inquiries and analytical reviews.