Question

Chapter 1 Principles of Auditing

What was the first auditing standard-setting body?

Auditing involves an investigation and a report. The audit process involves gathering and evaluating evidence to issue an opinion. P.7

What is the primary purpose of an independent financial statement audit?

In order for an auditor to attest to the fairness of information reported in the financial statements, the auditor must be _________.

Answer 1

QUESTION 1

On January 30, 1939 , Th committee on auditing procedure was formed by the AICPA i.e. American Institute For Certified Public Accountants to evaluate ,discuss and issue guidance exclusively on auditing related matters . This committee was the first to issue AUDITING STANDARDS to public accounting community.

QUESTION 2 PURPOSE OF INDEPENDENT financial statement audit ;

the primrary purpose and objective of audit of financial statement is to obtain reasonable assurance that whether financial statements are free from material misstatement or not and to communicate the opinion on the financial statement in manner as prescribed by relevant auditing standards and standardised reporting requirements

QUESTION 3

In order for the auditor to attest for the information presented in the financial statement auditor must consider the mandatory and detailed GAAP - GENERALLY ACCEPTED ACCOUNTING PRINCIPLES that set out how a company should account for and disclose even the most complex transactions. Auditor must exercise an attitude of question mind i.e. Professional skepticism in order to detect any area of possible misstatement . AUDITOR MUST ENSURE THAT TRANSACTIONS IN FINANCIAL STATEMENTS ARE SUPPORTED BY RELIABLE AND SUFFICIENT AUDIT EVIDENCE.