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Topic 2a audit lecture slides

Course Information

  • Course Name: Audit Process

  • Course Code: NMAC209

  • Lecturer: Ngonidzashe Elizabeth Chirima

  • Department: Accounting and Finance

  • College: College of Business and Management Sciences

  • Office Number: 115 IPLG Building

Lesson Recap

  • 15 Minute Re-cap of last lecture

  • Included in-class exercise and discussion

Today's Learning Objectives

  • ISA 200 Overview

    • Objective Audit Process

    • Introduction to the pre-planning stage

ISA 200 Overview

  • Overall Objectives of the Independent Auditor

  • Conduct of an audit in accordance with ISAs

Key Elements of ISA 200

  • Fundamental Objectives:

    • Auditor’s responsibilities when auditing financial statements under ISAs

    • Scope, authority, and structure of ISAs

    • Starting point for understanding ISAs

Audit Assumptions

  • Audits conducted under ISAs assume management accepts certain responsibilities fundamental to the audit

  • An audit does not relieve management or governance of their responsibilities

Scope of ISA 200

  • Establishes standards for the general principles of auditing financial statements

  • Management responsibilities:

    • Preparation and presentation of financial statements

    • Identifying the financial reporting framework

Objectives Achieved by Auditors

  • Attain reasonable assurance on financial statements' freedom from material misstatement

  • Express opinion on the conformity of financial statements with financial reporting frameworks

  • Report and communicate findings as per ISAs

ISA 200 Requirements

  • Ethical Requirements

  • Professional Skepticism

  • Professional Judgment

  • Obtain Sufficient Appropriate Audit Evidence

  • Address Audit Risk

  • Conduct audit in accordance with ISAs

  • Address failures to achieve objectives in relevant ISAs

Ethical Requirements

  • Compliance with ethical standards, particularly the IFAC Code of Ethics

  • Adherence to national codes of conduct relevant to jurisdiction

Professional Skepticism

  • Auditors must recognize potential material misstatements

  • Maintain a skeptical attitude throughout the audit

Professional Judgment

  • Defined as applying training, knowledge, and experience with professional standards to make decisions during an audit

Sufficient Appropriate Audit Evidence

  • Auditors must collect sufficient evidence to reduce audit risk to an acceptable level

  • Evidence is the basis for forming the audit opinion

Conduct of Audit According to ISAs

  • Must comply with all relevant ISAs

  • Understand ISAs fully to apply their objectives and requirements

  • Document any failures that prevent achieving objectives

Replanning and Planning

  • Importance of addressing planning and conditions of an audit

  • Audit Stage 1: Pre-planning stage

    • Background checks

    • Pre-conditions of an audit

    • Agree on engagement terms

Conclusion

  • Summary of key concepts covered during the course.