Related Research Articles
A financial audit is conducted to provide an opinion whether "financial statements" are stated in accordance with specified criteria. Normally, the criteria are international accounting standards, although auditors may conduct audits of financial statements prepared using the cash basis or some other basis of accounting appropriate for the organisation. In providing an opinion whether financial statements are fairly stated in accordance with accounting standards, the auditor gathers evidence to determine whether the statements contain material errors or other misstatements.
The auditor's report is a disclaimer thereof, issued by either an internal auditor or an independent external auditor as a result of an internal or external audit, as an assurance service in order for the user to make decisions based on the results of the audit.
Statement on Auditing Standards No. 99: Consideration of Fraud in a Financial Statement Audit, commonly abbreviated as SAS 99, is an auditing statement issued by the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA) in October 2002. The original exposure draft was distributed in February 2002.
An external auditor performs an audit, in accordance with specific laws or rules, of the financial statements of a company, government entity, other legal entity, or organization, and is independent of the entity being audited. Users of these entities' financial information, such as investors, government agencies, and the general public, rely on the external auditor to present an unbiased and independent audit report.
Generally Accepted Auditing Standards, or GAAS are sets of standards against which the quality of audits are performed and may be judged. Several organizations have developed such sets of principles, which vary by territory. In the United States, the standards are promulgated by the Auditing Standards Board, a division of the American Institute of Certified Public Accountants (AICPA).
International Standards on Auditing (ISA) are professional standards for the performance of financial audit of financial information. These standards are issued by International Federation of Accountants (IFAC) through the International Auditing and Assurance Standards Board (IAASB). According to Olung M ISA guides the auditor to add value to the assignment hence building confidence of investors.
Materiality is a concept or convention within auditing and accounting relating to the importance/significance of an amount, transaction, or discrepancy. The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in conformity with an identified financial reporting framework such as Generally Accepted Accounting Principles (GAAP).
Editing ISA 500 Audit Evidence is one of the International Standards on Auditing. It serves to expect the auditor is to obtain audit evidence from an appropriate mix of tests of control systems and substantive tests of transaction and balances.
Internal control, as defined in accounting and auditing, is a process for assuring of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. A broad concept, internal control involves everything that controls risks to an organization.
In financial auditing of public companies in the United States, SOX 404 top–down risk assessment (TDRA) is a financial risk assessment performed to comply with Section 404 of the Sarbanes-Oxley Act of 2002. The term is used by the U.S. Public Company Accounting Oversight Board (PCAOB) and the Securities and Exchange Commission (SEC). The TDRA is used to determine the scope and required evidence to support management's testing of its internal controls under SOX404. It is also used by the external auditor to issue a formal opinion on the company's internal controls. However, as a result of the passage of Auditing Standard No. 5, which the SEC has since approved, external auditors are no longer required to provide an opinion on management's assessment of its own internal controls.
This page is a list of auditing topics.
Sampling risk is one of the many types of risks an auditor may face when performing the necessary procedure of audit sampling. Audit sampling exists because of the impractical and costly effects of examining all or 100% of a client's records or books. As a result, a "sample" of a client's accounts are examined. Due to the negative effects produced by sampling risk, an auditor may have to perform additional procedures which in turn can impact the overall efficiency of the audit.
Fraud deterrence has gained public recognition and spotlight since the 2002 inception of the Sarbanes-Oxley Act. Of the many reforms enacted through Sarbanes-Oxley, one major goal was to regain public confidence in the reliability of financial markets in the wake of corporate scandals such as Enron, WorldCom and Waste Management. Section 404 of Sarbanes Oxley mandated that public companies have an independent Audit of internal controls over financial reporting. In essence, the intent of the U.S. Congress in passing the Sarbanes Oxley Act was attempting to proactively deter financial misrepresentation (Fraud) in order to ensure more accurate financial reporting to increase investor confidence. This same concept is applied in the discussion of fraud deterrence.
Inherent risk, in a financial audit, measures the auditor's assessment of the likelihood that there are material misstatements due to error or fraud in segment before considering the effectiveness of internal control. If the auditor concludes that a high likelihood exist, the auditor will conclude that inherent risk is high.
Substantive procedures are those activities performed by the auditor to detect material misstatement or fraud at the assertion level.
Entity-level controls are internal controls that help ensure that management directives pertaining to the entire entity are carried out. They are the second level of a top-down approach to understanding the risks of an organization. Generally, entity refers to the entire company.
There were many events that led to the financial crisis of the late 2000s, and many differing views on which parties were primarily responsible. The main groups that have been identified for playing a major role in the crisis include: investment bankers, credit rating agencies, financial statement preparers, the Federal Reserve, investors, loan originators, auditors, and borrowers among others. For a detailed background on the causes of the crisis and the parties that contributed please reference:Causes of the 2007-2012 global financial crisis and “History of Fair Value Issues” The purpose of this article is to expand on the role that accountants specifically played within the late 2000s financial crisis.
References
- ↑ ISA 200 Objectives and General Principles governing audit of Financial Statements.
- ↑ Staff, Investopedia (14 August 2010). "Detection Risk" . Retrieved 14 November 2017.