Assurance Engagement
PROFESSIONAL RESPONSIBILITY AND LIABILITY
INTRODUCTION
The imprecision in accounting leads to an imprecision in the ability to verify financial statement presentations. Accounting and auditing require the application of significant professional judgment. Hence, the auditor seeks only a reasonable basis for expressing an opinion on the fairness of the financial statements. In making an examination, the auditor obtains evidence for sound and well-grounded conclusions about the fairness and representational faithfulness of the accounting treatment of transactions, balances, and disclosures in the financial statements.
There may be a material difference in the valuation of inventory based on the choice of inventory
methods. Furthermore, should variances from standard costs be included in inventory or directly expensed as part of cost of sales. Such questions must be answered to determine the cost of inventory, let alone considering the estimation involved in evaluating the net realizable value of inventory.
RESPONSIBILITY OF AUDITOR
1. Measure and record transaction data
2. Assess the risk of material misstatement in management’s financial statements
3. Classify and summarize recorded data
4. Obtain and evaluate evidence to respond to risks of material misstatement in the financial statements
5. Evaluate reasonableness of accounting estimates
6. Obtain reasonable assurance that financial statements are presented fairly in conformity
with GAAP
7. Prepare financial statements per GAAP
8. Express opinion through auditor’s report and other communications
9. Distribute financial statements and auditor’s report to stockholders in annual report
10. Communicate findings to management and the board of directors through other required
communications and assurance services method.
INTERNAL AUDITING
In June 1999, the Institute of Internal Auditors (IIA) adopted a new definition of internal auditing. Internal Auditing is an
INTRODUCTION
The imprecision in accounting leads to an imprecision in the ability to verify financial statement presentations. Accounting and auditing require the application of significant professional judgment. Hence, the auditor seeks only a reasonable basis for expressing an opinion on the fairness of the financial statements. In making an examination, the auditor obtains evidence for sound and well-grounded conclusions about the fairness and representational faithfulness of the accounting treatment of transactions, balances, and disclosures in the financial statements.
There may be a material difference in the valuation of inventory based on the choice of inventory
methods. Furthermore, should variances from standard costs be included in inventory or directly expensed as part of cost of sales. Such questions must be answered to determine the cost of inventory, let alone considering the estimation involved in evaluating the net realizable value of inventory.
RESPONSIBILITY OF AUDITOR
1. Measure and record transaction data
2. Assess the risk of material misstatement in management’s financial statements
3. Classify and summarize recorded data
4. Obtain and evaluate evidence to respond to risks of material misstatement in the financial statements
5. Evaluate reasonableness of accounting estimates
6. Obtain reasonable assurance that financial statements are presented fairly in conformity
with GAAP
7. Prepare financial statements per GAAP
8. Express opinion through auditor’s report and other communications
9. Distribute financial statements and auditor’s report to stockholders in annual report
10. Communicate findings to management and the board of directors through other required
communications and assurance services method.
INTERNAL AUDITING
In June 1999, the Institute of Internal Auditors (IIA) adopted a new definition of internal auditing. Internal Auditing is an
References: ICAN(2009) Audit and Assurance, Lagos: VI publishing ICAN(2009) Advance Audit and Assurance, Lagos: VI publishing Millichamp, A. H. (1996) Auditing, London: hetts Educational INTERNET SOURCES http://www.accountinglibrary.com/liabilitesofauditors http://www.accountinglibrary.com/auditorsreponsibilityes http://ritggers.edu/liabilitiesofauditors http://www.pwcglobal.com/auditing