Category: AUDIT

Professional Ethics of an Auditor

A professional accountant is responsible for satisfying the needs of their clients or employers. However, their responsibility also extends toward the public. The accountancy profession requires accountants to act in the public interest. The same concept applies to auditors. In the auditing process, the professional ethics of an auditor is …

What is an Unqualified Audit Opinion

Stakeholders use financial statements to make decisions about their relationship with a company or organization. However, they also need certainty related to the figures reported in those statements. Hence, they refer to the audit report, which includes an independent auditor’s audit opinion. This opinion may be of four types. However, …

What is Qualified Audit Opinion

When auditors audit a client’s financial statement, they must reach some conclusions. Usually, these conclusions relate to whether the financial statements meet pre-identified suitable criteria. Once they do so, auditors must express their opinion. This opinion may either be unmodified or modified. Among modified audit opinions, auditors may also provide …

What are the Types of Audit Opinions

The primary objective of most audit assignments is for the auditor to express an opinion regarding the subject matter. Usually, they report it in a document known as the audit report. The term audit opinion defines a statement provided by auditors about a given subject matter. This opinion may differ …

Audit Committee Terms of Reference Best Practice

Corporate governance is a system of practices, rules, and processes by which companies are directed and controlled. It provides a framework for companies to achieve their objectives. Corporate governance defines several rules and practices that help companies run effectively and efficiently. Among these, corporate governance requires companies to establish several …

What is the Substantive Audit Approach

An audit approach defines the strategy that auditors use to conduct an audit. Usually, auditors use a specific audit approach for every audit assignment based on several factors. Among these approaches, some may apply to clients or engagements in different industries. One of these includes the substantive audit approach, also …

Balance Sheet Audit Approach

With external audits, auditors examine a client’s financial statements. These financial statements primarily include the balance sheet and the income statements. Usually, auditors employ an audit approach such as substantive procedures or a system-based approach for these audits. Sometimes, however, auditors may focus on the balance sheet only. In that …

Risk-Based Approach to Audit

Auditors must consider the audit risks associated with audits. It is crucial that they reduce these risks to an acceptable or reasonable level. However, most traditional audit approaches overlook audit risks. While these approaches still cover most risks, they are not suitable for risky audits. For these audits, auditors need …

What is System Based Audit

When auditors commence an audit engagement, they must decide on what audit approach to use. The audit approach is a strategy auditors use to perform audits. This approach differs based on several factors and will vary for each audit engagement. There are several audit approaches that auditors may employ. One …

How to Determine Materiality in Audit

Auditors do not provide absolute assurance for audit assignments. It is because they cannot test every single transaction or balance. Usually, auditors work with limitations, such as time, which require them to complete their work before a specific time. However, they still need to test items that they may consider …