What is the test of details performed by auditor?
Test of details refers to tests/procedures performed by auditor to obtain sufficient and appropriate audit evidence on different items of financial statement. These items include … Read more
Audit
Five threats to auditor independence
Threats to auditor independence must be reviewed before engaging any audit activity. In simple words, an audit must be conducted independently of the client’s management. … Read more
Representation letter in auditing
Representation letter is used by auditor to get confirmation from audit client that they have been fair in providing all the relevant information/explanation to the … Read more
What is a disclaimer of opinion?
Disclaimer of opinion meaning Disclaimer of opinion means that auditors were not able to make any opinion on the financial statement of the business. So, … Read more
statuatory audit vs.internal audit
Following are the facts for statuatory audit vs.internal audit. Statutory audit Internal audit It is required by law. The provisions of the company ordinance require … Read more
Audit VS. Assurance
An audit is a process of checking accounting and other information given in the financial statement. For instance, the closing balance of property, plant and … Read more
Qualities of a good auditor
Broadly, there are three qualities of a good auditor, these include knowledge on financial principles & audit processes, certain personality characteristics, and experience in the … Read more
Scope of an audit
The scope of an audit means extent of work the auditor needs to perform. If the scope of an audit is extensive, the auditor needs … Read more
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
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
Vouching vs tracing
Vouching and tracing 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