Audit

During any audit assignment, auditors must ensure that they are independent of the client’s management. It is one of the critical requirements for continuing an audit objectively. However, there are some threats that auditors may face which may endanger their independence as well as objectivity. These threats include self-interest, self-review, familiarity, intimidation, and advocacy threats. […]

When preparing financial statements, a business’s or company’s management makes various claims. These claims come in the form of financial statement assertions. Financial statement assertions include a set of claims that are crucial for the preparation of financial statements. These assertions apply to the balance sheet and income statement, both of which are critical financial

Every company or business around the world operates in a risky environment. These risks can be internal, such as risks of operations or processes not going according to plan. Similarly, these risks can also be external and caused by several factors. Some of these which dictate risk are political, environmental, technological, economic, social, or legal

Due to various factors, such as time or costs, auditors do not apply audit procedures on all items when auditing the financial statements of a company. Therefore, they apply procedures on some items, which they select using audit sampling. There are several audit sampling techniques that auditors may use. However, it may cause some auditors

Due to the agency problem, shareholders appoint auditors to verify whether the financial statements prepared by the management of a company are free from material misstatements and present a true and fair view. Auditors may also test the internal controls of a company to identify any weaknesses and provide recommendations about them to the management.

Audit firms provide clients with various services. Most prominently, audit firms render the services of external auditing. In this process, auditors examine the financial statements and internal controls of the client and form an opinion regarding whether they present a true and fair view and free from material misstatements. During an external audit, auditors perform

When it comes to audit evidence, auditing standards require auditors to obtain audit evidence that is sufficient and appropriate. While the sufficiency of audit evidence relates to its quantity, its appropriateness depends on its quality. The reason why auditors obtain the evidence is to form an opinion on whether the financial statements present a true

The audit process includes auditors applying different audit procedures to test the assertions of the financial statements. These assertions vary according to whether the auditors are performing procedures on account balances or transactions. These audit procedures allow auditors to form an opinion related to whether the financial statements of the client are free from material

In a majority of businesses, the owners and the management are different. It is because owners may not have the necessary knowledge and skills to run their business. Therefore, they appoint people with expertise and knowledge to run their business. In this relationship, owners provide the capital necessary for the business to run, while the

During an audit assignment, auditors must perform various audit procedures to verify different aspects of financial statement items. These aspects generally come in the form of assertions. For every financial statement item, the assertion tested will differ. Therefore, auditors must use different procedures to verify all of them. Similarly, the assertions also vary based on