Module 1 summary

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.

Explain the objective and purpose of an audit of financial statements, and outline the two key components of the audit process

The two key components of the audit process are

Explain how information risk arises and how audits can help reduce information risk

Describe the principal activities of a public accounting firm

Describe the role of the staff accountant on a typical audit engagement, and explain how continuous training on audit engagements prepares staff for future opportunities in the organization

Compare external auditing to internal auditing

Describe the concept of an assurance engagement, explain audit engagements in terms of the general framework of assurance engagements, and explain the difference between an attest engagement and a direct reporting engagement

Audit engagements:

Attest engagements and direct reporting engagements:

Distinguish between audit, review, and compilation engagements

Draft a standard auditor’s report and describe its components

Drafting a standard auditorís report:

Components of a standard auditorís report:

Evaluate when an auditor would issue an audit report containing an unqualified opinion, a qualified opinion, an adverse opinion, or a denial of opinion