What is an auditor?
Independent professional who performs the audit and expresses an opinion on whether the financial statements are fairly presented.
Why is corporate governance needed?
principal-agent relationship
Auditors help ensure accountability by providing independent assurance that management’s financial reporting is credible
What are the 4 steps of the audit process?
- Pre-Engagements
- Planning
- Obtaining Evidence
- Evaluation, Conclusion and Reporting
What is the role of an auditor?
Ownership vs Management – shareholders rely on management’s reports.
Public Confidence – auditors enhance trust in financial statements.
Accountability – directors are held accountable through independent verification.
What is the definition of an audit? S.O.E.A.C.C.
Audit is a systematic process of objectively gathering and evaluating evidence about management’s assertions regarding economic actions and events, to determine whether those assertions correspond to pre-defined criteria (such as IFRS), and to communicate the results in writing to interested users.
What is the objective of an audit?
The main objective is to express an opinion on whether the financial statements, as a whole, are free from material misstatement and present fairly in all material respects, according to the applicable financial reporting framework.
What are the inherent limitations of an audit? F.A.L.S.E.R.
Financial reporting
Audit procedures
Legal limits
Sampling
Evidence cost
Resources
What are the two types of audit opinions?
Unmodified (clean) and modified
What is the main purpose of IRBA?
To protect and promote the interests of investors, the public, and auditors by maintaining quality and ethical conduct.
What functions does IRBA have?
Registers and disciplines auditors.
Enforces auditing standards.
Monitors quality and independence.
What if the purpose of SAICA?
To protect and promote the interests of Chartered Accountants in South Africa.
What are the characteristics of a Professional Accountant? M.A.O.S.
Mastery of intellectual skill.
Acceptance of duties to society.
Objective outlook.
Rendering service to a high standard.
What is the Function of IFAC?
Aims for worldwide development and enhancement of the accounting profession.
Promotes harmonised auditing standards for consistent global quality.
South Africa aligns with IFAC standards through IRBA and SAICA membership.
What is the Function of IAASB?
Operates under IFAC.
Develops and issues ISAs (International Standards on Auditing).
Ensures global consistency in audit quality.
What types of auditor engagement and assurances can be provided?
Reasonable - High level (Audit)
Limited - Moderate level (Review)
Non - No Opinion (Other)
Type of auditor? E.I.G.F.S.
External
Internal
Auditor-General
Forensic
Special Purpose
