Class Notes (1,100,000)
CA (630,000)
SFU (10,000)
BUS (1,000)
BUS 426 (10)

BUS 426 Lecture Notes - Financial Audit, International Financial Reporting Standards, Audit Risk

Business Administration
Course Code
BUS 426
Brad Bart

This preview shows pages 1-3. to view the full 20 pages of the document.
Preface: Auditing An International Approach, Fifth Edition, Smielauskas &
“Many Professional developments have taken place in the first decade of the 21st
century. These include adoption of new Canadian Auditing Standards (CASs),
the further development of public accountability boards and their monitoring
activities, and increasing emphasis on corporate governance, internal controls,
risk-based auditing, independence and quality controls. In this edition, we
summarize these developments through mid 2009, offering our perspective on
their significance. We refer to this dramatically altered corporate landscape as
the “post- Enron audit environment.”
In this environment, we see not only radical changes in audit standards and the
regulatory environment, but also significantly revised expectations of the
auditor’s role in corporate governance and capital markets. The environment is
characterized by more risks for auditors and their clients than ever before, as
well as more restrictions on non-audit services for audit clients. However, we find
the broadening adoption of internationalized auditing standards in Canada and
other countries opens the door on an exciting new era for the auditing profession.
With a high quality globalized set of audit standards, developed by an
international standards board, and based on codes of conduct that encompasses
ethical conduct and independence as key requirements, a new bar is set for
quality in audit practice.
Fraud, corporate governance, independence risk, the role of audit committees,
global convergence of audit and accounting standards, and information
technology have all become more prominent since the fourth edition;
consequently, all these issues have been updated for the fifth edition. As in the
past editions, we continue to provide thorough coverage of auditing at the
conceptual and procedural levels. Overall, we hope that the students come away
with a well-rounded and forward-looking learning experience in the field of
auditing, and a thorough introduction to the new Canadian Auditing Standards
coming into effect for financial statements for periods ending on or after
December 14, 2010. We hope this edition’s coverage of the introduction of the
new CAS in Canada may also be a helpful reference and resource during this
transition stage in auditing practice.”
ACCT4570 WINTER 2013

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

A good definition of auditing provided by the Committee on Basic
Auditing Concepts of the American Accounting Association:
Auditing is a systematic process of objectively obtaining and
evaluating evidence regarding assertions about economic actions
and events to ascertain the correspondence between these
assertions and established criteria and communicating the results to
interested users.
Explanation of terms
Objectively: in an unbiased and impartial manner
Evidence: all the influences upon the minds of auditors that
ultimately guide their decisions. Evidence includes the underlying
accounting data and all available corroborating information as
discussed in section 5300.
Assertions: usually in the form of financial statements, are
management representations.
Established criteria: GAAP
Communicating the results: an example is the opinion paragraph
of the audit report.
ACCT4570 WINTER 2013

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Opinion paragraph – CAS 700 (Sect 5400.14)
In the opinion paragraph, the auditor should express his or her
opinion whether the financial statements present fairly, in all
material respects, the financial position, results of operations and
cash flows of the entity in accordance with Canadian generally
accepted accounting principles.
Using their training and experience (judgement) auditors determine:
what evidence to examine, or its nature
how much evidence to examine, or its extent
when to collect the evidence, or its timing
Two Main Parts to the Audit Process
1. Determining the nature, extent and timing of audit evidence to
obtain, and evaluating the evidence efficiently and effectively.
(Efficiency – cost of auditing; effectiveness – reaching the right
2. Communicating the auditor’s findings through the auditor’s report.
Defined: The failure of accounting statements to appropriately
reflect the economic substance of business activities, including
business risks and uncertainties. From the auditor’s perspective,
ACCT4570 WINTER 2013
You're Reading a Preview

Unlock to view full version