Category: AUDIT

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 …

What are the Types of Audit Approaches

What is an Audit Approach? The term audit approach defines the strategy that auditors use when conducting an audit. It allows auditors to perform their tasks effectively and efficiently. The audit approach may differ based on several factors. These factors may include the nature of the client and its industry, …

What Does Due Diligence Mean?

What does Due Diligence mean? Due diligence is the process of investigating, reviewing, and auditing that companies and businesses perform. Usually, they do so to confirm facts relevant to a financial transaction. For example, companies may perform due diligence before acquiring another company. They may do so to verify whether …

What Is Regulatory Risk?

There are various risks that surround any company. Some of these may come from external factors, while others may relate to internal operations. For external risks, there are five areas that may affect the risks faced by a company. These include political, economic, social, technological, environmental, and legal matters. Among …

Audit Committee Role in Corporate Governance

What is Corporate Governance? Corporate governance represents a system of rules, practices, and processes which dictate how companies should operate. Technically, corporate governance can be defined as “the system by which companies are directed and controlled in the interests of shareholders and other stakeholders”. The control and direction may come …

Audit Risk and Materiality

Two topics in auditing closely relate to each other. These are audit risk and materiality. While both of these are crucial in any audit assignment, they are different concepts. Therefore, it is necessary to know what each of these is to understand them better. What is Audit Risk? Audit risk …

Audit Report of a Company

What is an Audit Report? An audit report is a statement usually presented by the external auditors of a company. The audit report provides the auditor’s opinion regarding whether a company’s financial statements are accurate and fair. In official terms, the audit report comments on whether a company’s financial statements …