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1

Professional judgment?

Professional judgment

The application of relevant trainning, knowledge and experienc, within the context provided by auditing, accounting and ethical standards in making informed decision about the course of action that are appropriate in the circumstances of the audit engagement

2

Professional scepticism

Professional scepticism

An attitude that includes a questioning mind and a critical assessment of evidence

3

REVIEW:

REVIEW:

•Moderate/Limited level of assurance

•A review is designed to lead to a conclusion that nothing has come to the auditor’s attention that would make them believe the financial report is materially misstated;

–Collect limited evidence (Enquiry; Analytical Procedures; reading and assessing minutes of meetings and financial reports; tracing accounting records to the financial report

4

AUDIT:

AUDIT:

•High/Reasonable level of assurance

•In an audit, practitioners obtain a lot more evidence, giving them a higher level of comfort thereby allowing a more direct opinion stating that the financial report isn’t materially misstated.

•the work performed is more detailed and involves additional types of procedures, eg inspection, recalculation and confirmation.

•An audit usually also involves specific procedures to look at the operation of the entity’s internal controls relevant to financial reporting.

5

Some Other Types of Assurance Engagements

Compliance Audits:

•Compliance Audits:

–Examination of financial information that focuses on the legality and control of operations;

–Particularly prominent in government departments who are accountable for their receipts and expenditures;

ATO desk audits of individuals; OH&S audits

6

Some Other Types of Assurance Engagements

•Performance Audits:

Some Other Types of Assurance Engagements

•Performance Audits:

–‘Value for money auditing’, ‘Operational auditing’, ‘efficiency auditing’, ‘program results auditing’;

–Designed to analyse organisational structure, internal systems, work flow and managerial performance;

–Very common in public sector;

–Recommendations for restructuring; Personnel training and replacement; cost-value analysis of internal controls...

7

Internal Audits:

•Internal Audits:

Not a separate type of audit;

–Undertaken people who are employees of the audited entity;

–Role varies immensely: Internal controls; Risk management; Corporate governance etc..

8

Forensic Audits:

•Forensic Audits:

–Focus is on investigating, detecting, and deterring fraud and white-collar crime;

–Analysing unauthorised financial transactions; Reconstructing incomplete accounting records etc...

9

•Comprehensive Audit:

•Comprehensive Audit:

–Usually includes components of compliance, performance and financial report audits;