Audit and Assurance W1-3

Define and explain financial audit?
The indépendant examination of, and expression of opinion on the financial statements of an enterprise, in order to give reasonable assurance that the financial statements are factual, free from bias, reflect the commercial substance of transactions.
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Briefly explain what is meant by the 'systems based' audit approach?
Involves auditors identifying, evaluating and testing systems of internal control and then looking to place reliance upon the internal controls.
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Briefly explain what is meant by the 'risk based' audit approach?
An audit team will apply most audit efforts to the highest risk areas identified , and then testing focusses on these higher risk areas in order to avoid 'over-auditing'.
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Briefly explain what 'assurance services' are?
Wider ranging, less subject to regulation than statutory audit. E.g. small firms that aren't required by law but still require independent examination, growth in accounting industry, checking league tables to adding value to information provided.
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Briefly explain what the International Standards on Auditing (ISA's) are?
Standards issues by the IAASB which spells out the guidelines and principles which auditors must comply with. 36 ISA's. Enhance quality and uniformity of audit practice.
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When does audit become a statutory requirement in the UK?
Companies turnover is greater than £10.2m per year (UK companies act 2006)
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Other cards in this set

Card 2

Front

Briefly explain what is meant by the 'systems based' audit approach?

Back

Involves auditors identifying, evaluating and testing systems of internal control and then looking to place reliance upon the internal controls.

Card 3

Front

Briefly explain what is meant by the 'risk based' audit approach?

Back

Preview of the front of card 3

Card 4

Front

Briefly explain what 'assurance services' are?

Back

Preview of the front of card 4

Card 5

Front

Briefly explain what the International Standards on Auditing (ISA's) are?

Back

Preview of the front of card 5
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