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3) Objectives and Scope of FS Audit
3) Objectives and Scope of FS Audit
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At the end of this topic, students should be able to:
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Topic outline
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Objective of a FS Audit
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Objective of a FS Audit (contd.)
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Auditor’s Responsibilities for
detecting & reporting of fraud & error
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What is fraud?
q Intentional misrepresentations
q Example :
ü Manipulation, falsification or alteration of
records or documents
ü Misappropriation of assets
ü Omission of the effects of transactions from
records/documents
ü Recording of transactions without substance
ü Misapplication of accounting policies
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What is error?
q Example :
ü Mathematical/clerical mistakes in the
underlying records and accounting data
ü Oversight or misinterpretation of facts
ü Misapplication of accounting policies
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Who is responsible to detect
fraud & error?
Through the
Responsible to
implementation of
MANAGEMENT prevent & detect
adequate system of
F&E
IC
However, such
Not eliminating the
system will only
possibility of F&E
reduce
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Who is responsible to detect
fraud & error? (contd.)
Responsible to
AUDITOR
plan audit
In order to Designing a
detect material sufficient audit
misstatements programme
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Management Assertions
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Management Assertions (contd.)
o Example:
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Categories of Management Assertions
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Categories of Management Assertions (contd.)
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Example: Audit objective for assets
MGT ASSERTIONS AUDIT OBJECTIVE
Rights & Obligations All items included in assets are controlled by the
entity at SOFP date