Auditing and assurance

pexels photo 4144096

Four causes of misstatements in the financial statements,#3 will surprise you.

Misstatements are difference between what accounting standards and framework want financial statements to be and what financial statements actually are. ISA 450  define misstatement as difference between the amounts, classification, presentation, or disclosure of  reported financial statement item and the amount, classification, presentation, or disclosure that is required for for the item to be in
Read the rest
pexels photo 4386373 1

5 types of threats to IFAC fundamental principles of code of ethics.

Accountant is required to comply with five fundamental principles specified by IFAC code of ethics. However, compliance with fundamental principles may potentially be threatened by broad range of Circumstances.

The following are categories of threats that may potentially affect compliance with fundamental principles.

Self interest threats.

This may occur as result of the financial or … Read the rest

pexels photo 3727511 1

7 limitation of organization internal control.

Internal control, as defined in accounting and auditing, is a process for assuring achievement of an organization’s objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies.

Internal controls are essential features of any organization that is run efficiently. However, it is important to realize (especially for an … Read the rest

9 benefits of marginal costing

Ten (10) basic elements of audit report

Audit report is the end product of audit process in which auditor express his opinion on truth and fairness of financial statements. the audit report have uniform content and structure to enable understandability and comparability between audit report of one entity and another or between report of different period of the same entity.

The following

Read the rest
Why is absolute assurance in auditing impossible?

Six (6) matters to be evaluated before expressing audit opinion.

Audit opinion is the conclusion that auditor present through audit report on whether financial statement which was audited shows true and fair view.

Before forming an opinion the auditor should conclude :

  • Whether there is misstatement or scope limitation
  • Whether effects of misstatement or scope limitation is immaterial, material or pervasive

Auditor should also evaluate the following:

  • Whether the accounting
Read the rest
Ethical issues to be considered by auditor in client acceptance

Ethical issues to be considered by auditor in client acceptance.

Before accepting new client relationship, a auditor should consider whether acceptance would create any threats to compliance with fundamental principles. Potential threats to integrity or professional behaviour may be created from, for example, questionable issues associated with client (its owners, management and activities).  

Client issues that if known, could threaten compliance with the

Read the rest
pexels photo 196649

What is meant by appropriateness of audit evidence?

Appropriateness of audit evidence  is the measure of the quality  of the audit evidence that is its relevance and its reliability in providing support for the conclusion on which the auditor’s opinion is based. It is one of key characteristic of good audit evidence. The other characteristic of audit evidence is sufficiency of audit evidence. Relevance of audit evidence is … Read the rest