Audit & Assurance

An Overview
by AUB
 Financial Audit of ICFR Integrated Audit Compliance Audit

Statements Audit

Performance Internal Audit Functional

Audit Audit

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Financial Statements Audit

Expression of Opinion
 Either Financial Statements are giving True & Fiar View or Not
 Are prepared in accordance with IFAC & other Regulatory Requirements
 Are free from Material Misstatement

Audit of ICFR
Required by Public Companies in the United States
Expressing opinion on effectiveness of Internal Controls over Financial Reporting Process

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Integrated Audit
Combined Audit of financial statement with effectiveness of ICFR

Compliance Audit:
Assessment if Regulations & Rules are conformed/complied.

Performance Audit:
Assessment of the 3 E’s of operations
3 E’s include Economy, Efficiency and Effectiveness

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Internal Audit
Internal Function that evaluates & improves:
• Risk Management
• Internal Controls
• Governance Process

Functional Audit:
Audit of any Specific Segment, area or department
Examples may include Sales Audit, HR Audit etc.

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Materiality: Important Terms of Auditing
• That could potentially Change the Decision of Users of F/S

Those Charged with Governance:

• Who have Responsibility for overseeing Strategic Direction
• Owing obligations of Accountability

Reasonable Assurance:
• High Level Assurance is provided not Absolute Assurance

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Management’s Responsibility:
• Preparation of Financial Statements
• Ensuring Fairness & Compliance of IFAC/GAAP
• Implementing Internal Control System
• Providing Unrestricted Access to Auditor

Auditor’s Responsibility:
• Conducting Audit in accordance with Auditing Standards
• Performing the audit with Professional Skepticism
• Managing the audit with professional judgment by maintaining
Skillset & Knowledge

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Audit Reports:
• Report is issued upon completion of Audit Work
• Report is issued on standard format

Unmodified Unqualified Opinion:

Unqualified Opinion is formed when it is affirmed that
• Financial Statements are giving True & Fair View
• Free from Material Mis-Statement
• Prepared in Accordance with Standards

Qualified Opinion:
• Opinion may be qualified in several cases
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 Qualified Opinion
• Material Discrepancies in Financial • Qualified – Financial Statements are presented fairly, Except
Reports and Client Refuses to make For the uncorrected areas
corrections
• Adverse – Financial Statements are not presented Fairly and
should Not be Relied Upon (pervasive Deviations)

• Material Limitation in Scope of • Qualified – Financial Statements are presented fairly, Except
Work For the auditor’s inability to gather evidence
• Disclaimer of Opinion – Inability to obtain sufficient
appropriate evidence (pervasively material scope limitations)

• Disclaimer of opinion – auditor is not independent and

• Auditor is Not Independent
cannot express an opinion

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 Ethical & Professional Issues
Fundamental Principles

Integrity & Independence

Being Straight forward & Honest
Not associate with Misleading Information
Auditor has to maintain its Independence
Independence in Fact
Maintaining Independence through Integrity & Objectivity
Independence in Appearance
Avoiding potential Conflicts of Interest that can be observed by Others 10
 Ethical & Professional Issues
Fundamental Principles

Confidentiality
Not disclosing confidential information
Not using confidential information for personal use

Professional Competence & Due Care

Maintaining Skillset & Knowledge level
Acting according to Professional Standards

Professional Behavior
Complying with Laws & Regulations
Avoid exaggerated claims about their services
Avoid disparaging remarks about professionals
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