AUDIT CHAPTER 3~

2 Days without blogging due to my eyes got problem..But still,because of it i got the time to fully focus on my study eventhough with one eyes closed(saket sgt)..Back to business,i will summarize another chapter of audit,was thinking to do for other subjects as well but depends on how much free time i have..

Basically audit chap 3 is about the audit report..audit report is issued by auditor after the finished auditing the company's financial statement..there are few types of report produced by auditor,unqualified audit report(UAR),unqualified audit report but with explanatory para,qualified audit report,adverse and disclaimer..the report is produced depending on the level of materiality..

for unqualified report, there are 7 parts that myst be included..:

1. Report title,must contain the word independent to convey to users that the auditor are independent party.

2.Address to whom,mostly the BOD and shareholders..

3.Intro para,must include intro about the company,list of financial statement that has been audit, and also statement's of responsibility that require auditor to express oppinion..

4.Scope of para,must include what the auditor did..

5.Oppinion para,state the conclusion based on the audit..

6.name of CPA,state the CPA name..

7.date,the date the audit report was produced...

for the standard unqualified report to be issued by auditor,the audit result should hit all the criterias :

1.all statements are included in the financial statements

2.the 3 general steps are followed closely

3.suffiecience appropriate evidence has been accumulated

4.financial statement are prepared according to GAAP

5.no circumstances requiring more explanation para

the unqualified audit report but with explanation para is issued when the audit think that there is a need to explain on few things..the report is unqualififed,but due to perhaps changes in accounting policies has make it necessary for the auditor to add the explanatory para..another reason is that the auditor doubt about the going concern of the company..

a disclaimer and adverse report is used when the level of materiality is high..adverse oppinion is used when auditor believe the statement is highly material and not fairly stated(means there are missing part of it) and this could only arise if the auditor has knowledge about this after investigation..disclaimer oppinion is issued when the content of statement is highy material and the auditor cant satisfied himself and would not issued oppinion about the statement,this can arise without auditor's knowledge compare to adverse..

about materiality,how to measure the level of materiality is subjective..as long as it does not effect decission laregely then it is consider immaterial or material but if its effect the decission badly then it is consider as highly material..

basically,thats the brief info about audit chap 3..i'll write again on other chapters as well..

till then...

-theskyisnevertoohightoaim-