Module 1 Summary

Introduction to auditing

This module provides a framework for auditing and an explanation of its nature and purpose. External and internal auditing are described and compared. The module also includes a discussion of the audit report and an overview of the umbrella concept of assurance engagements.

Define auditing and the objective of an audit of financial statements.

Define information risk and explain how it arises.

Explain the purposes of an audit of financial statements.

Describe the principal activities of a public accounting firm.

Compare external auditing to internal auditing.

Describe the operational auditing function in a company.

Explain comprehensive auditing for the public sector.

Describe the concept of an assurance engagement.

Explain the difference between an attest engagement and a direct reporting engagement.

Explain audit engagements in terms of the general framework of assurance engagements.

Distinguish between audit, review, and compilation engagements.

Describe the components of a standard auditor’s report.

Explain the reasons for reservations in an auditor’s report.

Describe the circumstances in which an auditor would issue an audit report containing an unqualified opinion, a qualified opinion, an adverse opinion, and a denial of opinion.

Draft a standard auditor’s report.

Describe in general terms the recommendations concerning the presentation of additional information in the auditor’s report and disclosures for comparative figures.