Professional Documents
Culture Documents
Chapter 01
Chapter 01
An Introduction to Assurance
and Financial Statement Auditing
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The Demand for Auditing and
Assurance
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Principals and Agents
A public company is a company that sells its stocks or
bonds to the public, giving the public a valid interest in
the proper use, or stewardship, over the company’s
resources.
Managers Stockholders
Agents Principals
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The Role of Auditing
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Auditing, Attest, and Assurance
Services Defined
Assurance
Auditing Attest
Services
Assurance
Auditing Attest
Services
McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved.
Auditing, Attest, and Assurance
Services Defined
Assurance
Auditing Attest
Services
McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved.
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Audit Risk
Audit risk is the risk that the auditor may
unknowingly fail to appropriately modify his or her
opinion on financial statements that are materially
misstated.
Materiality
Relevance Reliability
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It would be too
costly for the auditor
to examine every
transaction.
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End of Chapter 1
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