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.