Types of audit risk
There are three types of audit risk. These types of audit risk include inherent risk, control risk, and detection risk. 1-Inherent risk The nature of … Read more
Audit
What is audit risk and how it’s assessed
Definition Audit risk is the risk that auditors might issue a clean audit report when financial statement are materially misstated. The material misstatement in the … Read more
Tracing vs. vouching
Tracing and vouching play a number of similar roles in auditing, but the key difference is the use of these auditing procedures to collect audit … Read more
Why is external auditing important?
External auditing is important to assess the fairness of financial statements prepared by the management. As we understand, there is an agency relationship between shareholders … Read more
What is a cut off concept in accounting/audit?
The cut off concept in accounting aims to ensure events and transactions are posted in the correct accounting period. It helps to calculate profit/loss without … Read more
What is an audit program?
Definition The audit program is a detailed action plan for the audit team. It sets a direction for an audit team to perform audit procedures. … Read more
Qualities of audit evidence
Auditors collect audit evidence during fieldwork. If audit evidence is sufficient and appropriate, they issue a clean audit report. Sufficiency of audit evidence refers to … Read more
What is audit risk (functional aspects)
Definition The audit risk is that auditors might issue an inappropriate audit report. It’s a prime business risk for audit firms that might bring reputational … Read more
Audit report modification/changes
Audit report modification is when auditors need to change/modify their audit opinion. The audit report can only be changed/modified in line with the accounting standard. … Read more
What is audit report?
The audit report is a document attached with the financial statement. In this report, external auditors state their opinion about the financial statement prepared by … Read more
What is directional testing in an audit?
Definition Directional testing is when auditors obtain sufficient and appropriate audit evidence from a specific direction. The directional testing can be either debit or credit … Read more
What is going concern assumption?
Definition Going concern assumption is used by businesses to prepare the financial statement. This assumption impacts the accounting treatment, valuation, and presentation of various account … Read more
List of audit procedures in external audit
Audit procedures in external audit play important role. Without performing these procedures, an auditor may not verify audit assertions and issue audit report. It’s advisable … Read more
Why external auditors assess internal controls?
Auditors need to understand the overall business environment and controls implemented by the audit client. This enables them to assess the overall risk of material … Read more
Why is business understanding important for the auditor?
Business understanding is important for auditors in the following way, Auditors will be able to assess the risk of material misstatement more precisely. It helps … Read more
What are audit assertions?
Definition Audit assertions are claims made by management that financial statements are accurate and do not contain any errors. Here, auditors’ work begins and they … Read more
What is Know your client – (KYC) in an audit?
Definition In an audit, know your client means an auditor needs to understand client business. The understanding needs to be obtained from different perspectives including … Read more
What are the audit procedures?
Definition Auditors perform audit procedures to obtain sufficient and appropriate audit evidence on the identified risks. Generally, auditors understand business, assess the risk of material … Read more
What is audit scoping?
Definition Audit scoping refers to the process of setting extent, nature, and timing of audit procedures to be performed. The scope of auditing is dependent … Read more
Quality Control Review (Definition, Importance, Elements, Procedure)
The term Quality control review is widely used in the world of accounting and auditing. It aims to enhance the accuracy of implemented controls in … Read more