Audit (13)
- Definition
- Independent review of entity’s financial statement
- Objectives
- To provide an opinion on fairness and reliability of the financial statements
- The auditor
- Examine company’s accounting and internal control system
- Confirm asset and liabilities
- Make sure no error
Standard auditor’s opinion (14) contains 3 parts and states that
- 1: Auditor has performed an independent review
- 2: Accepted auditing standard were followed
- 3: The auditor is satisfied that the statement were prepared
- Accordance with accepted accounting principles
- Principle and estimates made are reasonable
- With explanation when accounting methods have not used consistently between two periods
- Type of opinions
- Unqualified opinion
- Auditor believes the statements are free from material omission and errors
- Qualified opinion
- If the statement make and exceptions to accounting principles
- Explain these exception
- Adverse opinion
- The statement is not presented fairly or materially non-conforming with accounting standards
- Disclaimer of opinion
- The auditor is unable to express an opinion
- Unqualified opinion
- Going concern assumption
- When a material loss is probable but the amount cannot be reasonably estimated
- Assumption that the company will continue to operate in foreseeable future
Internal control (15)
- Is the process by which companies ensures that it presents accurate financial statements
- The auditor must express his opinion on the firm’s internal control