Audting 4

PA503 : FUNDAMENTAL OF AUDITING

MADAM JULIANA

VIKNESHWARY D/O VERAN

10DAT11F2005

KOGILA DEWI D/O SANDRA

SEGARAN10DAT11F

SUGUNA D/O RADHAKRISHNAN

10DAT11F2033

SOBANA D/O PACHEAPPAN

10DAT11F2037

RUPINI D/O ARUMUGAM

10DAT11F2024

GROUP 4

CHAPTER 4

AUDIT OBJECTIVES &

GENERAL PRINCIPLES

4.1 : UNDERSTAND THE AUDIT OBJECTIVES

4.1.1 Identify audit objectives

4.1.2 Discuss each of the objectives

4.1.3 Discuss the purpose of setting the objectives

MANAGEMENT ASSERTIONS

TRANSACTION –

RELATED

OBJECTIVESBALANCE – RELATED OBJECTIVES

MANAGEMENT ASSERTIONS Management assertions are the assertions by management about the accuracy of

the financial statement components.

An auditor typically uses these assertions to help guide the type of audit evidence gathered.

These assertions are :

Transactions Occurrence

Authorizations Accuracy

Completeness Cut off

Classifications

TRANSACTION – RELATD OBJECTIVESE

Objectives related to classes of transactions

Management Assertions Transactions – related audit objectives

Descriptions

Existence or occurrence Occurance Record amount represent valid transactions

Completeness Completeness All transactions have been recorded

Accuracy • Accuracy• Posting and summarization

• Prices & quantity are correctly recorded• Amounts are properly summarized and record in master files

Classification Classification Transaction are properly classified into the correct accounts

Cut off Timing Amounts are recorded on correct dates

Relation of Assertions & Transaction – related audit objectives

BALANCE – RELATD OBJECTIVESE

Objectives related to ending balance classes in accounts

Relation of Assertions & Balance – related audit objectives

Management Assertions Balance – related Audit objective

Descriptions

Completeness Completeness All amounts are reflected in the financial statement

Accuracy Individual amounts are correct & properly summarized

Valuation or Allocation Classification Financial statement amounts are properly classified

Cutoff Amounts are recorded in the proper period

Detail tie - in Summary of individual amounts agrees with general ledger

Realizable value Amounts are written down where net realizable value is impaired

Existence Existence Recorded amounts exist

4.2 : Appreciate the General Principles

4.2.1 Identify the general principles as stated in auditing standards

4.2.2 Explain in general the ethical of professional conduct as stated in By-Law.

4.2.3 Illustrate each of the general principles using examples cases.

Part 1 : By – laws on professional ethics

110 – Integrity

120 – Objectivity

130 – Professional competence and due care

140 – Confidentiality

150 – Professional behavior

290 – Independent

To comply with relevant laws and regulations and avoid any action that discredits the

profession.

Because its refrain from any conduct that might bring discredit to the profession.

Do not allow as, conflict of interest or under influence of other to override professional or business judgments.

To be straightforward & honest in all professional & business

relationship.

Integrity

Objectivity

Professional behavior

The fact that this is self evident in the reporting function must be not obscure

its relevance in respect of other professional work.

Consists of various means that CA firms use to engage new clients, other than

accepting new clients that approach the firm.

Solicitation

Independent

Is the use of various media, such as magazines, and radio to communicate

information about the services of the CA firm

PublicityMay be similarity defined

Advertising

To maintain professional knowledge and skill at the level required to ensure

that a client or employer receives competent professional services based

on current development in practice, legislation and techniques, and act diligently and in accordance with

applicable technical and professional standards.

Professional competence &

due care

Confidentiality

To respect the confidential of information acquired as a result of professional and business relationship and , therefore not disclose any such information to third

parties without proper and specific authority, unless there is a legal or professional right or duty to disclose

nor use the information for the personal advantage.

4.3 : Understand the quality control

4.3.1 Describe audit quality control in general as in the

Malaysian Auditing Standard

4.3.2 Explain the needs of quality control

4.3.3 Examine each of the quality control stated in the standard

Audit quality control in general as in the Malaysian auditing standard

The MIA , as a member of the ( IFAC ) is committed to the federations board mission to serve the public interest.

It establishing and promoting adherence to high quality, professional standards.

International convergence of such standards and speaking out on public interest issues

( Where the professions expertise is most relevant )

V

IFAC Board has established the International Auditing and Assurance Standards Board (IAASB )

Develops and issues, in the public interest and under its own authority, high quality standards on auditing, quality control, review, other assurance and related service and facilitates the convergence of international and national standards.

K

MIA is obliged to support the work of IFAC

Incorporate the International Standards and related Practice Statements issued by the IAASB into its national standards, or related other pronouncements

Assists in the implementation of International Standards and related Practice

K

The MIA has determined to adopt the International Standards as the Malaysian approved standards on quality control, auditing, review other assurance and related services.

In the event that a standard contains guidance which issignificantly different from Malaysian law or practice.

V

4.3.2 : Explain the needs of quality control

A firm should establish a system of quality control designed to provide it with reasonable assurance.

A system of quality control consists of policies designed to achieve the above objectives and the procedures.

MIA has not yet set specific quality control procedure for CA firm.

Procedures should depend on such things as the size of the firm, the number of practice offices, and the nature of the practice

Audit firm ( policies and procedures should ensure audits areproperly conduct )

Acceptance and retention of clients Monitoring of all quality control policies and proceduresAssignment of audit work

Individual audits

The process whereby audit working papers are subject to a detailed check. The work has been performed in accordance with the audit programmed.Work performed result obtain have been documented

Quality control policies and procedures should be at two levels. First level : Audit firm Second level : Individual audits

4.3.3 Examine each of the quality control stated in the standard

ELEMENTS DESCRIPTION

Leadership Responsibilities for Quality to promote an internal culture based on the recognition that quality is essential in performing engagements.require the firm’s CEO to assume primary responsibilty for the firm’s quality control.

Ethical Requirements to provide the firm with reasonable assurance that the personnel and the firm comply with -the fundamental principles of professional ethics;-maintain independence in all required circumstances;-perform all professional activities with integrity;-maintain objectivity in discharging professional responsibilities.

Acceptance and Continuance of Client’s Relationship and Engagements

for deciding whether to accept or continue an engagement and whether to perform a particular engagement for the client. provide the firm with reasonable assurance that the likelihood of a relationship with a client whose management lacks integrity is minimised.

Human Resources for hiring,assigning personnel to engagement ,professional devolopments and advancement activities which provide reasonable assurance that:a) the engagement personnel posess

the appropriate characteristics to enable them perform competently.

b) work is assigned to personnel having the degree of technical training and proficiency required.

c) personnel participate in general; engagement-specific continuing

professional education; professional development

activities that enable them to fulfil responsibilities assigned;

applicable continuing professional education required by the professional bodies and regulatory agencies.

Monitoring to provide the firm with reasonable assurance that the policies and procedures established by the firm for each quality control element are appropriately designed,relevant,effective and comply with current practice.

Engagement Performance to provide the firm with reasonable assurance that the work performed by engagement personnel meets applicable,professional standards,regulatory requirements and the firm’s quality standards.

THANK YOU

Q & A