©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6 - 1
Audit Objectives
GROUP MEMBERS :
NOOR AMANINA ZAKARIA RATNA DEWI A/P PALANIAPPAN
MOO ZIOW CHENG YONG YUE LING YEO SHU CHIN
KANIMOLI A/P SEGARAN
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6 - 2
Objective of Conducting an Audit of Financial Statements
The PRIMARY objective of the auditis to express an opinion on the
financial statements.
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Objectives of an Audit of Financial Statements
Present Fairly1
2 In all Material Respects
3Financial Position, Results of
Operations, & Cash Flows
4 In Conformity with GAAP
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Transaction-RelatedAudit Objectives
Existence
Completeness
Accuracy
Recordedtransactions exist.
Existing transactionsare recorded.
Recorded transactionsare stated at thecorrect amount.
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Transaction-RelatedAudit Objectives
Classification
Timing
Posting andsummarization
Transactions areproperly classified.
Transactions are recordedon the correct dates.
Transactions are includedin the master files and
are correctly summarized.
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General Balance-RelatedAudit Objectives
Existence
Completeness
Accuracy
Amountsincluded exist.
Existing amountsare included.
Amounts includedare stated at thecorrect amounts.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6 - 7
General Balance-RelatedAudit Objectives
Classification
Cutoff
Detail tie-in
Amounts areproperly classified.
Transactions are recordedin the proper period.
Account balances agreewith master file amounts,
and with the general ledger.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6 - 8
General Balance-RelatedAudit Objectives
Realizablevalue
Rights andobligations
Presentationand
disclosure
Assets are included atestimated realizable value.
Assets must be owned.
Account balances anddisclosures are presentedin financial statements.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6 - 9
Four Phases of an Audit
Phase I
Phase II
Phase III
Phase IV
Plan and designan audit approach.
Perform tests ofcontrols and
substantive testsof transactions.
Perform analyticalprocedures andtests of detailsof balances.
Complete theaudit and issuean audit report.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6 - 10
SECONDARY OBJECTIVE
The SECONDARY objective of the auditis to report the financial condition
of the business.
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ERRORS & FRAUDS
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Detection and prevention of Errors
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Detection and prevention of Errors
ERRORS OF PRINCIPLE: While recording a transaction, the fundamental
principles of accounting is not properly observed, these types of errors could occur. Over valuation of closing stock or incorrect allocation of expenditure or receipt
between capital and revenue are some of the examples of such errors. Such errors will not affect the trial balance but will affect the Profit and Loss account. It may occur
due to lack of knowledge of sound principles of accounting or can be committed deliberately to falsify
the accounts. To detect such errors, the auditor has to do a careful examination of the books of account.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6 - 14
DETECTION & PREVENTION OF FRAUDS
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THANK YOU
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