Assurance utilitys - bargain delay audit or revisal of unvarnished financial knowledge and boldnesss bargaining delay esthetic esthetics other than unvarnished financial knowledge. * calculated to better the grade of confindence of the planned users other than the beneath obligation margin encircling the fruit of the evaluation or space of a esthetic esthetic counter criteria FF. are the ample categories of utilitys beneath the umbrella of boldness utilitys: 1. Endanger toll 2. Knowledge classification reliability 3.
Adequacy of impudence balance Electronic intercourse actions, electronic documents, and oceantenance classifications 4. Effectiveness of Health anxiety achievement space classifications 5. Reliability and alliance of Business achievement space * it evolves naturally from Attestation utilitys, which in shape evolve from audit * The source of all three is fractions certainty Non-boldness utilitys (Related Services) – pertain to comsituation of financial knowledge , agreed-upon-procedures and other allied utilitys which do not end in the look of misrecord that furnishs a flatten of boldness.
Auditing – is a classificationatic arrangement of objectively conciliateing and evaluating declaration touching selected assumptions encircling economic actions and events to discover the grade of letter among those assumptions and symmetrical criteria and communicating the end to careful users. * determining whether recorded knowledge rightly reflects the economic events that occurred during the recitaling era. Elements: * Disconnected arrangement * Objectivity * Obtaining and evaluating declaration * Assertions encircling economic actions and events * Grade of letter... stablished criteria * Communicating ends * Careful users Attestation - refers to an expert’s written despatch of a misrecord encircling the reliability of someone else’s assumptions. * when a practitioner is betrothed to end a written despatch that directes a misrecord encircling the reliability of a written assumption * a mark of boldness utility whose esthetic esthetic (twain FS and non-FS in composition) * countenance some flatten of boldness Ex. of suggest utilitys: 1. Future-oriented financial knowledge 2. Management’s discourse and partition 3.
Effectiveness of inner govern 4. Docility delay statutory, regulatory and contractual obligations Consulting utilitys (Management Advisory Services) – dutyal utilitys that furnish teaching and countenance touching an entity’s constitute, personnel, finances, agencys, classifications, or other activities. * an analytical arrangement that typically involves some league of activities relative-to to: a) objective-setting b) fact-finding c) restriction of problems or opportunities d) evaluation of alternatives e) outgrowth of approveations including actions ) despatch of ends g) implementation h) follow-up - descriptions are generally written in a fact guileate - comsituation and occasion is steadfast by treaty among the dutyal recitalant and the client Areas of consulting utilitys: 1. Consultations 2. Advisory 3. Implementation 4. Action 5. Staff and other oceantenance 6. Product AssuranceConsulting * three margin-two margin contractscontracts * to better disposition-to approve of knowledgeuses for infos. * resolution manufacturers & -Outcomes info. used for optimum resolutions * planned to better-calculated to ecision manufacturer’s better client’s stipulation by-and-by stipulation’s thru quickly thru approveationsfindings, misrecords and approveation Four stipulations that invent insist for audits: 1. Potential contest of attention among those who plan knowledge & those who use knowledge. 2. Knowledge can entertain corporeal economic consequences for a resolution manufacturer. 3. Expertise is frequently required for preparing and verifying knowledge 4. Users of knowledge frequently are prevented from quickly assessing the dissituation of knowledge
Stewardship or exercise Theory – implies that the overseer, as well-mannered-mannered as the proprietor, wants the accuracy an audit adds to the financial assumption assumptions. Types of Audits 1. Docility Audits – to enumerate docility delay criteria, standards, or rules set by an dictatorial theme 2. Treatment Audit (Effectiveness of Performance) – an criterion and evaluation of the activities of treatment 3. Achievement Audit – analyzes an constitute’s composition, inner classifications, is-sue glide and overseerial achievement 4. Comprehensive Audit – embraces the components of docility, achievement and financial assumptions udit 5. Operational Audit – to enumerate the space to which some appearance of an constitute’s unreserved activities is dutying issueively 6. Inner Audit – an fractions, ovjective boldness and consulting breath calculated to add esteem and better an constitute’s agencys. Helps by bringing a classificationatic, disciplined advent to evaluate and better the issueiveness of endanger treatment, govern and governance arrangement 7. Environmental Audit – environmental esthetics which may entertain an collision on the financial assumptions 8.
Forensic Audit – criterion of declaration 9. Financial Statements Audit Types of Auditors 1. External (independent) testifiers – exoteric recitalants, twain men-folks or firms 2. Inner testifiers – utilitys for a sole constitute for which they are filled on a full-time cause, typically descriptioning to the table of directors 3. Council testifiers – full-time employees of the council tasked to enumerate docility delay laws, statutes, policies and procedures 4. Forensic testifiers – financial auditing specialists who nucleus on unearthing the truth
Auditing and Boldness Standards Council (AASC) – theme authorized to organize and proclaim generally received auditing standards (GAAS) in the Philippines * The ocean distinguishing component of auditing and allied utilitys is the flatten of boldness furnishd by the testifier in the pledge. * An testifier becomes associated delay the financial knowledge through the devotion of a description or when consenting to the use of testifier’s guileate in dutyal junction. Remedies if notorious that the testifier’s guileate is unbefittingly used: 1.
Request treatment to seal the irmisapply society of testifier’s guileate 2. Inconstitute any notorious third margin users 3. Seek juridical teaching Sarbanes Oxley Act of 2002 (SOX) – congress passed in the USA in solution to increased event of corporate abstraction. * gave Exoteric Companies Accounting Oversight Table (PCAOB) authority to organize auditing standards, dissituation govern standards and anarchy standards for testifier of exoteric companies * Philippine Securities and Exchange Commission (SEC) in its Resolution No. 135 Series of 2002 – Code of Corporate Governance
Assurance Pledge - an pledge in which a practitioner directes a misrecord calculated to better the grade of self-reliance of the planned users other that the beneath obligation margin encircling the fruit of evaluation or space of a esthetic esthetic counter criteria. “Subject esthetic knowledge” – the fruit of the evaluation or space of a esthetic esthetic. Types of Boldness Pledge Objective Misrecord 1. Sound – endanger diminutionPositive to an pleasantly low flatten 2. Poor – endanger diminution to a flatten Negative that is delectable in the circumstances
Elements of an Boldness Engagements 1. A three-margin alliance - practitioner - beneath obligation margin - planned users 2. An embezzle esthetic esthetic a) identifiable and suitable of accordant evaluation or space counter the authorized criteria b) knowledge encircling it can be estheticed to procedures for muster enough embezzle declaration to oceantenance a sound boldness or poor boldness misrecord 3. Suitable criteria – benchmarks used to evaluate or estimate the esthetic esthetic, including where misapply, benchmarks for grant and unveiling. . Enough embezzle declaration – an aspect of dutyal unbelief to conciliate enough embezzle declaration 5. A written boldness description in the constitute embezzle to a sound boldness pledge or a poor boldness pledge – a misrecord that conveys the boldness conciliateed encircling the esthetic esthetic knowledge Assertion-based pledge: * In provisions of the beneath obligation margin’s assumption * Quickly in provisions of the esthetic esthetic and the criteria Non-boldness Engagements Engagements expert by ISRS/PSRS, such as agreed-upon procedures pledges and comsituation of financial or other info * provision of tax profits where no misrecord conveying boldness is developed * consulting pledges, e. g. Treatment and Tax consulting Reports on Non-boldness Engagements – lucidly distinguishes that description from an boldness description Philippine Standards on Boldness Engagements – covers boldness pledges other than audits or revisals of unvarnished financial infos. Acronyms: * AASC – Auditing and Boldness Standards Council * ASPC – Auditing Standards and Practice Council GAAS – Generally Received Auditing Standards * PICPA – Philippine Institute of Certified Exoteric Accountants * ACPAPP – Society of CPAs in Exoteric Practice * ISAEs – International Standards on Boldness Engagements * PCAOB – Exoteric Companies Accounting Oversight Table * AAS – Auditing and Boldness Services * FRF – Financial Reporting Frameis-sue * PAS – Philippine Accounting Standards * PFRS - Philippine Financial Reporting Standards * PSA – Philippine Standards on Auditing * PRC – Functional Regulation Commission * BOA – Table of Accountancy Chapter 2 Objectives of Financial Assumption Audit to empower the testifier to direct an conviction whether the financial assumptions are pland, in all esthetic commendations, in agreement delay an conducive financial descriptioning frameis-sue -Auditor is beneath obligation for constituteing and directing conviction on the FS and should enumerate whether such financial descriptioning frameis-sue adopted by treatment is delectable -Management those teeming delay governance and has the leading province of preparing and presenting these FS in agreement delay frameworks and beneath obligation for identifying the financial descriptioning frameis-sue to be used
Complete Set of FS: * Assumption of Financial situation * Assumption of Comprehensive Income * Assumption of Changes in Equity * Assumption of Cash Flows * Notes General Principle of Audit 1. Ethical Requirements - Dissituation govern 2. Audit in agreement delay PSA 3. Functional unbelief - questioning liking 4. Objectives - impair audit endanger to an delectable flatten Boldness Granted by Testifier 1. Cause of declaration infered (which embrace sampling) 2. Testifier furnishs sound boldness 3.
Financial assumptions are bounteous from esthetic falsifications (materiality) * Sampling – used to infer declaration on financial assumption amounts and unveilings * Sound Boldness – alludes to the concept of audit endanger which is indicated in the audit duty and involved in the occasion article of testifier’s description * Esthetic falsifications – no answer-for that the FS are servile. Testifier furnishs sound boldness touching esthetic falsifications and an conviction on candor, in all esthetic appearances.
Collusions – when two or more men-folks is-sue conjointly to issue miswithhold or occultation. Assertions - representations by treatments, open or differently, that are esthetic in the financial assumptions * Inner govern assumptions – an involved assumptions by treatment that such inner govern procedures are issueive as to twain their guile and agency * Financial Assumption assumptions – treatment asserts that the financial assumptions, and by contortion the financial assumption items and beneathlying recital balances and classes of action, are bounteous of esthetic falsification.
Level of Aggregation Category of FS Assertions per the AASC’s Glossary of Terms: 1. Existence 2. Rights and Obligations 3. Event 4. Completeness 5. Valuation 6. Space 7. Grant and unveiling Audit Objectives * to infer and evaluate audit declaration of enough share and embezzle dissituation in appoint to constitute an conviction on the financial assumptions pland by treatment. Three Fundamental Concepts in Conducting an Audit 1. Materiality – grade of misassumption or oversight . Audit endanger - testifiers may unbefittingly direct his conviction 3. Declaration – refers to the compulsory knowledge that an testifier infers in appoint to constitute a likely conviction on the assumptions Audit Description 1. Title 2. Addressee 3. Introductory article 4. Management’s province 5. Auditor’s province 6. Auditor’s conviction 7. Other descriptioning responsibilities 8. Auditor’s sigcomsituation 9. Date of the testifier’s description 10. Auditor’s harangue Other Types of Opinions
Qualified - developed when the testifier concludes that an outright conviction cannot be developed but that the issue of any distreaty delay treatment, or taciturnity on occasion is not so esthetic and pervasive Adverse - endd when the issue of a distreaty is so esthetic and pervasive to the FS that the testifier concludes that a secretiveness of the description is not distant Disclaimer – endd when the potential issue of a taciturnity on occasion is so esthetic and pervasive to the FS