Auditing in Specialized Industries PDF

Auditing in specialized industries Conceptual Framework (ACT101) Auditing & A Assu ssu ssurrance: 4. Bankers – FS influence their decision to lend Specialized Industries SCOPE...

Auditing in specialized industries Conceptual Framework (ACT101) Auditing & A Assu ssu ssurrance: 4. Bankers – FS influence their decision to lend Specialized Industries SCOPE money to the company. 5. Suppliers – FS influence their decision of whether The following are the scope of the course: to sell goods to the company. 1. Audit and Assurance Basic Concept 6. Customers – FS influence their decision of 2. Risk Assessment whether their supply of goods is secure. 3. Risk Responses 7. Employees – FS influence their decision of 4. Accounting Estimates and Judgements whether their employment is secure. 5. Journal Entry Testing 8. Investors – FS influence their decision of whether 6. Revenue Recognition to invest in the company. Audit and Assurance Basic Concept What is the objective of an aud audit it it?? What is Au Audit dit ditin in ing? g? The overall objectives of conducting an audit of FS are: The act of independently accumulating and evaluating  To obtain reasonable assurance about whether the evidence of an economic entity for the purpose of FS as a whole are free from material misstatements, reporting on the degree of compliance of information whether due to fraud or error, thereby enabling produced with established criteria (such as Generally the auditor to express an opinion on whether the Accepted Accounting Principles). FS are prepared, in all material respects, in We, as auditors gather evidence about a company’s FS accordance with an applicable financial reporting by performing our testing procedures with the goal of framework. communicating our audit findings to the users (usually, To report on the FS and communicate as required by  delivering an audit report to the company to include in its the AFRF, in accordance with the auditor’s period-end report to its shareholders or stakeholders). findings. 1. The phrases we use to express our audit opinion Why are audits perf perfo orm rmed ed ed?? are that the FS “give a true and fair view” or “are presented fairly, in all material respects,“ in Certain entities may be required to have an audit accordance with the AFRF. performed by law, such as:  Publicly held companies 2. It is important to understand that the user cannot  Publicly accountable entities assume that the opinion is an assurance as to the  Privately-owned companies future viability of the entity or the efficiency or  Sole proprietorships and partnerships effectiveness with which management has conducted the affairs of the entity. You may be wondering why audits must be performed when law does not require them to be. What are financial st state ate atemen men ments ts ts?? The auditors’ report provides credibility to the financial  Are a structured representation of historical financial statements produced by manage-ment. Therefore, audits information, including related disclosures intended to often are performed even though, by law, they may communicate an entity’s economic resources or not be required to be. obligations at a point in time or the changes You may be able to think of some other examples of therein for a period of time in accordance with a why an audit could be required or requested in your financial reporting framework. country. Some users of the entity‘s FS, including lenders, The term “FS” ordinarily refers to a complete set of FS investors, suppliers and government, may specifically that consists of: request the FS to be audited by an auditor so they can  Statement of Profit or Loss and Other confidently rely on the information provided in the Comprehensive Income (US GAAP: Income financial statements to make economic decisions. Statement)  Elements: Income, Expenses The purpose of audit is to enhance the degree of  Statement of Financial Position (US GAAP: confidence of intended users in the FS by issuing an Balance Sheet) opinion on whether the FS are prepared, in all material  Elements: Assets, Liabilities and Equity respects, in accordance with an applicable financial  Statement of Cash Flows reporting framework.  Statement of Changes in Equity Users:  Notes to FS 1. Shareholders - FS help them monitor the custody and performance of their investments. FS portray the financial effects of transactions and 2. Analysts – FS provide the basis for them to value other events by grouping them into broad classes a company and advise their clients. according to their economic characteristics. These 3. Regulatory Authorities – FS provide the basis for broad classes are termed the elements of FS. them to monitor a company. Management-prepared FS must comply with the basic principles of accounting – how assets, liabilities, revenues and expenses are to be applied, measured and 1 0 reported. The basic principles of accounting are listed below. Accrual Basis of Accounting Financial Statement Ass Assert ert ertio io ions ns FS are prepared on the accrual basis of accounting. The FS consists of many accounts which may include the Under this basis, the effects of transactions and other following: events are recognized when those effects occur (and  Cash not as cash or its equivalent is received or paid) and  Trade Receivables they are recorded in the accounting records and  Sales reported in the FS of the periods to which they relate.  Payroll Expense FS prepared on the accrual basis inform users not only Each FS account has FS assertions implicit in the of past transactions involving the payment and receipt financial statements. of cash but also of obligations to pay cash in the future Financial statement assertions are representations of and of resources that represent cash to be received in management, explicit or otherwise, embodied in the the future. Hence, they provide the type of information financial statements as used by the auditor to about past transactions and other events that is most consider the different types of potential useful to users in making economic decisions. misstatements that may occur. Historical Cost Principle Assets are recorded at the amount of cash or cash equivalents paid, or the fair value of the consideration given to acquire them, at the time of their acquisition. Financial Statement Assertions are categorized as as:: Balance Sheet Income Statement Liabilities are recorded at the amount of proceeds received in exchange for the obligation, or at the Existence Occurrence amounts of cash or cash equivalents expected to be Completeness Completeness paid to satisfy the liability in the normal course of Rights and Measurement business. Obligations Realization Principle Valuation Presentation and I ncome, or revenue, should be recognized only when Disclosure its conversion into cash has occurred or is reasonably Presentation and certain. Disclosure Consistency Principle *based on ISA. The consistency principle of accounting requires that entities give accountable events the same presentation During an audit, we determine which FS assertions are and accounting treatment from period to period to relevant to the significant accounts and disclosures. ensure comparability of FS with those of previous periods. We design and perform substantive procedures at the The consistency principle means that an entity applies assertion level to identify material misstatements and, the same methods from period to period in accordance if found, to quantify their effect in the FS. with the AFRF, but it does not mean that the entity cannot switch from one method of accounting to another in certain circumstances. Financial Statement Assertions *Based on PSA Full Disclosure Principle Accountants have adopted a principle of full disclosure Classes of transactions and events for the period under that generally calls for revealing in the FS any facts of audit: sufficient importance to influence the judgment of an a. Occurrence informed reader. b. Completeness Thus, the full disclosure principle requires the c. Accuracy presentation of sufficient information to permit the d. Cut-off knowledgeable reader to reach an informed decision e. Classification instead of indulging in a guessing game. The common methods of disclosure are presenting an Account balances at the period ended: account with a balance, parenthetical disclosure and a. Existence footnote disclosure. b. Rights and Obligations c. Completeness Objectivity (Verifiability) Principle d. Valuation and Allocation The objectivity principle states that accounting information and financial reporting should be Presentation and Disclosure: independent and supported with unbiased evidence. a. Occurrence and Rights and Obligations b. Completeness This means that accounting information must be based c. Classification and Understandability on research and facts, not merely a preparer’s opinion. d. Accuracy and Valuation The objectivity principle is aimed at making FS more reliable. What is an Audit Op Opinion inion inion?? The primary output of an audit is an opinion on an entity’s  After completion of all audit procedures, we FS. review and assess the conclusions drawn from the audit evidence obtained. These conclusions 1 0  are the basis for the expression of our opinion opinion on the FS due to the potential interaction on the FS. of the uncertainties and their possible cumulative  The audit opinion is the final step in the entire effect on the FS. audit process. The review and assessment considers whether the FS  The general reader of the company’s FS will not have been prepared in accordance with an AFRF. These know the details of our audit, nor will he or she be can be either of the following: able to look at the work papers that you prepared International Financial U.S. Generally to document your testing of the client’s cash Reporting Standards Accepted Accounting balances. (IFRS) Principles  The reader of the FS will be able to read our Another authoritative, opinion, and if it is an unqualified opinion, then know comprehensive financial reporting that the audit team has obtained reasonable Relevant National assurance that the FS as a whole are free from Accounting Standards framework that has been designed for use material misstatement, whether due to fraud or or Practices in financial reporting error. and is applicable in the What do we mean by “presents fairly, in all material FS. respects”? T Types ypes of Audit Op Opini ini inions ons  There is no legal definition of the phrases “presents fairly” or “true and fair” Unmodified Opinion  Determining this requires significant judgment An unmodified opinion should be expressed when the because auditing is not an exact science. auditor concludes that the FS are prepared, in all  The view presented in any set of financial statements material respects (or give a true and fair view) in is only one of several possible true and fair views. accordance with the AFRF.  Throughout your career, you will develop the Qualified Opinion judgment needed to determine these concepts related to clients’ FS. A qualified opinion should be expressed when the auditor concludes that misstatements, individually or in the aggregate, are material, but not pervasive, to the FS; or What is Ma Materia teria teriality lity lity?? is unable to obtain sufficient appropriate audit evidence on which to base the opinion , but concludes that the  You are auditing the cash account and are possible effects on the FS of undetected misstatements, if currently working on a client-provided cash any, could be material but not pervasive. reconciliation schedule.  While you are agreeing the beginning bank Adverse Opinion balance statement, you notice that the person who An adverse opinion should be expressed when the prepared the reconciliation accidentally used MU 1.3 auditor, having obtained sufficient appropriate audit million as the beginning balance on the evidence, concludes that misstatements, individually or in reconciliation. the aggregate, are both material and pervasive to the  The bank statement says the beginning balance is FS. actually MU 1.8 million, resulting in a MU 500,000 difference. Is this a material difference? What if the difference Disclaimer of Opinion were only MU 1,000? A disclaimer of opinion should be expressed when the  The concept of materiality as it relates to our audit auditor is unable to express an opinion because: can be tricky. A material difference at one of your  They are unable to obtain sufficient appropriate clients might not be a material difference at audit evidence on which to base the opinion, and another client. It all depends on the materiality the auditor concludes that the possible effects on levels established by your team in response to the the FS of undetected misstatements, if any, factors at that particular client. The determination could be both material and pervasive. of materiality is not a mathematical exercise but  In circumstances involving multiple requires professional judgment involving audit uncertainties, and not withstanding having executives, including the partner in charge of the obtained sufficient appropriate audit evidence audit. regarding each of the individual uncertainties, it is Materiality is defined as the magnitude of an omission not possible to form an or misstatement that, individually or in the aggregate, in light of the surrounding circumstances, could reasonably be expected to influence the economic decisions of the users of the FS. (What if the MU 500,000 error were to change an The MU 500,000 then would be material to that investor’s mind as to whether she wants to invest in company.) the company’s stock? 1 0  PSA and ISA.  The objective of an audit of FS is to enable the auditor to express an opinion about whether the An auditor should plan and perform an audit with an FS are prepared, in all material respects, in attitude of professional skepticism. accordance with an AFRF. Questioning mind of an auditor.  Our audits are designed to provide reasonable assurance (not absolute assurance) that the FS are not materially misstated. The basic concepts related to materiality ar are: e: We, as auditors, are not responsible for making sure that the client’s FS are 100% correct or to identify every small difference. We are responsible for expressing an opinion about whether the FS are prepared, in all material respects, Code of Ethics in accordance with an AFRF. for Professional Accountants  Sets standards of conduct for professional accountants. General Principles and  States the fundamental principles that should be observed by professional accountants in order to Scope of an Audit achieve common objectives. In instances where a national requirement is in conflict with a provision in the code, the national requirement prevails. Introd Introduction uction to General Principles of an A Aud ud udit it For example, the American Ins titute of Certified Public The three general principles of an audit: Accountants (AI CPA) sets out the principles and rules that An auditor should comply with a code of ethics should be observed by accountants practicing in the US. Similar to other professions, like law and medicine, the accounting profession has a code of ethics, which we should comply with at all times, unless certain parts of Integrity it being precluded by laws and regulations in specific circumstances. The principle of integrity imposes an obligation on all professional accountants to be straightforward and As an auditor, you should comply with the Code of honest in all professional and business relationships. Ethics for Professional Accountants issued by the Integrity also implies fair dealing and truthfulness. I nter national Federation of Accountants (IFAC). I FAC believes that the identity of the accountancy profession is characterized worldwide by its endeavor Objectivity to achieve a number of common objectives and by its The principle of objectivity imposes an obligation on all observance of certain fundamental principles for that professional accountants not to compromise their purpose. professional or business judgment because of bias, I FAC, recognizing the responsibilities of the conflict of interest or the undue influence of others. accountancy profession and considering its own role to be that of providing guidance, encouraging continuity of efforts and promoting harmonization, has deemed it Professional Competence and Due Care essential to establish the International Code of ethics for The principles of professional competence and due care Professional Accountants to be the basis on which the imposes the following obligations on all professional ethical requirements for professional accountants in acc ountants: each country should be founded. 1. To attain and maintain professional knowledge and skill at the level required to ensure that An auditor should conduct an audit in accordance with clients or employers receive competent applicable auditing standards. professional service, based on current technical and professional standards and relevant legislations. 2. To act diligently in accordance with applicable technical and professional standards. Confidentiality 1 0 The principle of confidentiality imposes an obligation  Inherent in this mission statement is the on all professional accountants to refrain from: understanding that “services of consistently high 1. Disclosing outside the firm or employing organization quality” implies that professional standards confidential information acquired as a result of governing those services are also of consistently professional and business relationships without high quality. proper and specific authority or unless there is a  The In ternat ion al Auditing and Assurance legal or professional right or duty to disclose; and Standards Board (IAASB), which is designated by, 2. Using confidential information acquired as a result of and operating independently under the auspices of professional and business relationships to their the IFAC , issue the I SAs. personal advantage or the advantage or the  When local standards exist, they govern the advantage of third parties. practices followed in the auditing of financial statements. Professional Behavior The principle of professional behavior imposes an Professional Skepticism obligation on professional accountants to comply with relevant laws and regulations and avoid any conduct  Plan and perform an audit with an attitude of that the accountant knows or should know might bring professional skepticism. discredit to the profession. This includes actions which a reasonable and informed third party would be likely  Professional skepticism includes a questioning mind, to conclude negatively affects the good reputation of being alert to conditions which may indicate the profession. possible misstatement due to fraud or error, and a critical assessment of evidence. For example, an attitude of professional skepticism is Responsibility of Professional Accountants necessary throughout the audit process for the auditor to reduce the risk of overlooking suspicious A distinguishing mark of a profession is acceptance of circumstances, of overgeneralizing when drawing its responsibility to the public. conclusions from audit observations, and using faulty assumptions in determining the nature, timing and  Invest ors extent of the audit procedures and evaluating the  Employers results.  Government  It is your responsibility to make sure you do not become too comfortable working with your client  Creditors and that you always question and verify the  Business community information that you obtain.  Public  Continue to question the reliability of documents and information until you are comfortable that you have obtained sufficient appropriate audit evidence.  Sound financial accounting and reporting  Not be too skeptical and not believe anything that your client tells you.  Effective financial management  Representations from management alone are not a  Competent advice on a variety of business and substitute for obtaining sufficient appropriate audit taxation matters evidence to be able to draw reasonable conclusions Professional accountant executes the services provided on which to base the audit opinion. at the highest level of performance and in accordance  Always keep on your “auditor hat” to gather and with ethical requirements. document sufficient appropriate audit evidence to support your conclusion. Inte rnational Standards on Auditing (IS (ISAs) As)  The auditor should conduct an audit of FS in Audit Scope accordance with IS As or local auditing standards, if Audit scope refers to the scope of services on a specific applicable. audit required by statutory and other regulatory  IF AC will continue to strengthen the worldwide requirements, entity expectations and/or professional accountancy profession and contribute to the requirements. development of strong international economies by  Number of locations establishing and promoting adherence to high- quality professional standards.  Number of procedures  Kinds of procedures The procedures required to conduct an audit in accordance with IS As or applicable local auditing standards should be determined by the auditor. 1 0   Requirements of ISAs factors from the Process for Acceptance of Clients and  Local Auditing Standards Engagements tool (PACE) at the beginning of the  Relevant professional bodies audit. We determine the effect on our risk assessments and incorporate the necessary additional actions or  Legislation procedures into our audit strategy and audit plan to  Regulations address these risk factors.  Audit Engagement and Reposting requirements We obtain an engagement agreement prepared in  Laws and Regulations accordance with APM AGREE TERMS Engagement agreements for assurance engagements, supplemented by local audit requirements, if applicable. Evaluate compliance with ethical requirements, including Audit Process independence. We determine compliance for both the firm and the members of the audit team. and Other In accordance with I ndependence Policy, we perform procedures to determine compliance with ethical Services requirements, including independence, prior to performing other significant activities for the current audit period. Phases of an Audit Engagement We determine that we are independent in fact and in appearance with the entity being audited. We ensure we have adequate professional competence The to perform the services required and we maintain client initial confidentiality during the current audit period, phase including securing the work papers. of a FS We ensure that we have fulfilled other ethical audit requirements relevant to our audit. involves the initial Establish the team. plannin g Our understanding of the entity obtained during the client and engagement acceptance or continuance activitie process, including our expectations about service s. requirements of those charged with governance and IN INITI ITI ITIAL AL management, helps us establish our audit team and PL PLANNI ANNI ANNINN determine team roles and responsibilities. G OF THE We determine the nature, timing and extent of AUDI UDITT resources and establish the audit team to achieve the EN ENGAGE GAGE GAGEMENT MENT appropriate balance of skills, experience and Understand service requirements and agree the scope of competence necessary to perform the audit. services. We make a preliminary assessment of additional expertise We understand the expectations of those charged with that is needed beyond that possessed by the members of governance and management to help us determine the the audit team and develop a plan to obtain the service requirements. We meet with those charged resources. We determine whether to use the expertise with governance and management early in the audit to of an internal specialist or an auditor’s external agree the scope of services, the timing of our work, specialist. the expected outputs and delivery dates, and any expectations we have of management. Determine the roles and responsibilities of team members. The result of this meeting provides us with information for planning the audit (e.g., the availability of data and We establish the roles and responsibilities of team use of automated techniques) and gives us an initial members for preparing and reviewing audit insight into potential areas of audit focus. documentation. We assess the results of our client and engagement Appropriate levels of supervision should be in place so acceptance and continuance process (including the risk members of the audit team understand the purpose of the assigned work and less experienced audit team members receive appropriate support and on-the-job training from more experienced team members. 1 0  We conduct timely reviews to determine that the work In the execution phase, we perform tests of controls when performed supports the conclusions reached and is we adopt a controls reliance strategy. documented appropriately. More experienced team members, including the partner in charge ( PIC), review We perform tests of controls when we plan to rely on work performed by less experienced team members. controls over a significant class of transactions or significant disclosure process (SCOT) or in other special circumstances. We then identify the controls, The second phase of an audit relates to understand their design and determine which are identification and assessment of risks and relevant to the audit. determination of our audit strategy. These are Test of controls may be performed either before, or at, crucial to a successful audit engagement. the balance sheet date. We exercise professional judgment in deciding when to perform them. Testing IDENTIFY AND ASSES ASSESSS RI RISK SK SKSS controls early may help us identify important matters The amount of effort to identify and assess risks and at an early stage of the audit and resolve them, with determine the audit strategy will vary with the size and the assistance of management, or address their effects complexity of the client and the auditor’s knowledge of on the audit by identifying effective mitigating controls and experience with the client. to rely on or revising our audit strategy. In general terms, the identify and assess risks element Based on the result of our tests of controls, we involves: evaluate the effectiveness of the design and operation of relevant controls and assess the control risks as  Obtain an understanding of the client’s business either ‘rely on controls’ or ‘not rely on controls’, for and industry each relevant assertion for each significant account and  Understand management’s assessment process disclosure. This assessment, combined with our inherent risk assessment, is the basis for our combined risk  Understand components of internal control at the assessment (CRA) for each relevant assertion. entity level We design the nature, timing, and extent of our  Identify and assess fraud risks substantive procedures to respond to our Combined Risk Assessment (CRA). Substantive procedures may  Make preliminary judgments about materiality levels be categorized as Primary Substantive Procedures (PSPs)  Iden tify significant accounts and disclosures and or Other Substantive Procedures (OSPs), which may relevant assertions include substantive analytical procedures, tests of details and /or tests of items to obtain information.  Identify and understand significant classes of transactions (SCOTs) Our substantive procedures may be different if we adopt a core GAM audit approach or a digital audit  Iden tify risks of material misstatement and make approach. We customize our substantive procedures to inherent risk assessments respond to our CRA.  Design an audit strategy to address identified risks In addition to the CRA, other factors that may of material misstatement, including fraud risks influence the timing of our procedures include:  Execute the Executive discussion and approval  The entity’s reporting deadlines, readiness and the points (EDAPs) availability of information to be audited.  Audit team’s reporting deadlines, availability and The third phase of the audit relates to the design efficiency factors. and execution of audit procedures to address the  The time needed for the entity or other parties to identified risks. respond to audit requests. DESIGN AND EXECUTE RESPONSES TO RISK ISKS S The primary objective of this audit phase is to design and CONCLUDE AND COM COMMUNI MUNI MUNICA CA CATE TE perform audit procedures to obtain sufficient appropriate audit evidence to be able to draw We aggregate the individual pieces of audit evidence reasonable conclusions on which to base our auditor’s obtained from our audit procedures for each relevant opinion. assertion to enable us to conclude whether we have obtained sufficient appropriate audit evidence to Sufficiency is the measure of the quantity of audit address the identified risks. evidence obtained. Appropriateness is the measure of the quality of audit evidence; that is, its relevance and its In addition, we evaluate the effect of accumulated reliability in providing support for the conclusions on misstatements, perform an overall analytical review, which to base our auditor’s report. We consider all reassess our risk assessment based on the results from relevant information from reliable sources, regardless our procedures and revisit our audit strategy, prepare of whether it corroborates or contradicts the Summary Review Memorandum (SRM), perform management’s assertions, bearing in mind potential risks subsequent events procedures, and obtain of bias. management’s representation letter. We obtain audit evidence from substantive procedures or combined with tests of controls, as appropriate. 1 0  We execute the Executive Discussion and Approval Points (EDAPs) to discuss and conclude on the overall Review Engagement financial statements, as well as agree the final versions of our communications to management and those In a review engagement, the auditor expresses a charged with governance. review report that is designed to enhance the degree of confidence of intended users regarding the We prepare the audit report where we express our preparation of an entity’s FS in accordance with an audit opinion on the client’s financial statements. The applicable financial reporting framework. The auditor’s audit report generally is issued when we have obtained report is based on the auditor obtaining limited sufficient appropriate audit evidence to form our assurance. opinion on the entity’s FS. The auditor performs primarily inquiry and analytical Finally, we wrap up the audit by completing the procedures to obtain sufficient appropriate evidence. documentation of our audit procedures, including their review and sign-off, and archiving our documentation In a review engagement, the auditor expresses a within the required timeline. conclusion on whether anything has come to the auditor’s attention that causes the auditor to believe the FS are not prepared, in all material respects, in accordance with an applicable financial reporting framework. Although the simplified descriptions of the phases of an audit give you only a general understanding of For example, EY may be asked to issue a review report on a company’s quarterly FS. what an audit is all about, this understanding, along with the other information you have learned so far in this course, allows you to understand the big picture of what an audit really is. Agreed-Upon Procedures (AUP) Engagement Levels of Assurance Provided For agreed-upon procedures, the auditor is engaged to carry out those procedures of an audit nature to which the auditor, the entity and any appropriate third from Different Type of Services parties have agreed and to report on factual findings. When performing agreed-upon procedures, no opinion is expressed. Assurance refers to the auditor’s satisfaction as to the For example, the firm may be asked to complete reliability of an assertion (i.e., the reliability of financial agreed- upon procedures related to a company’s profit- reporting and the preparation of FS) being made by one party (i.e., entity’s management) for use by another sharing calculation for the company’s employees. party (i.e., the intended users of FS). Reasonable assurance is a high, but not absolute, level of assurance. Compilation Engagement The degree of satisfaction achieved and, therefore, the Management may request a professional accountant in level of assurance that may be provided is determined public practice to assist with the preparation and by the procedures performed and their results. presentation of financial information of an entity. The level of assurance provided by the auditor is pre- In a compilation engagement, although the users of determined and agreed with those charged with the compiled information derive some benefit from the governance of the client prior to the acceptance or professional accountant’s involvement, it is not an continuance of engagement. assurance engagement. It does not require the professional accountant to verify the completeness of the information provided by management for the TYPES OF SERVICES PROVIDED BY A PROFESSIONAL compilation or otherwise to gather evidence to express ACC ACCOUNT OUNT OUNTANT ANT an audit opinion or a review conclusion on the preparation of the financial information. Due to the requirements for independence, an auditor Audit Engagement is not allowed to prepare the FS that they will later audit. In an audit engagement, the auditor provides a reasonable, but not absolute, level of assurance that the FS as a whole are free from material misstatements whether due to fraud or error. Course Summ Summary ary Reasonable assurance is a level of assurance. In this course, you have learned about the basic information surrounding what an audit is and the basic An example of an audit engagement is the period-end concepts of auditing. audit of a company’s FS. 1 0 The ultimate goal in performing an audit is to provide reasonable assurance to the users of the financial information that the balances are materially correct through our audit opinion. Remember the basic phases of an audit are:  Initial Planning of the Audit  Identify and Assess Risk  Design and Execute Responses to Risks  Conclude and Communicate We follow the auditing standards and requirements of our local countries and perform our audits in accordance with fundamental ethical principles and with an attitude of professional skepticism. 1 0 1 0