AFM351 Lecture Notes - Lecture 2: Income Statement, Greenhouse Gas, Internal Control
28 Jun 2018
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Department
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includes the subject matter information and a conclusion as to whether the subject matter
conforms to the applicable criteria. This type of engagement is called a
direct engagement
Financial statement audit
-
an audit conducted to determine whether the F/S of an entity are
presented fairly, in all material respects, in conformity with an applicable financial reporting
framework
•
Compliance audit
-
an audit performed to determine whether an entity complied with specific
laws, regulations, rules, or provision of contracts or grant agreements
•
This audit is direct reporting engagement
-
the auditor forms an opinion on the subject
matter directly
â—‹
Operational audit- a review of any part of an organization's operating procedures and methods
for the purpose of evaluating economy, efficiency, and effectiveness.
•
Types of audits and auditors
An independent, objective assurance and consulting activity designed to add value and improve an
organization's operations
•
Operational audits provide management with valuable information for decision concerning
the efficient and effective operation of the business
â—‹
Compliance audits focus on laws and regulations and other requirements to reduce fraud,
waste, and abuse
â—‹
Often perform operational and compliance audits. Both of these audits add value and can improve
organizational operations
•
In order to maintain independence, internal auditors report to the audit committee and senior
management
•
This lack of independence is the difference between internal and external auditors â—‹
Unlikely for users from outside of the entity to rely on information verified by internal auditors
because of their lack of independence
•
Internal auditors
Perform audit function for government
•
These government auditors in some ways are like external auditors.
•
They are organizationally independent of the government entities they audit and the auditor
general reports directly to the legislature
•
Similar to operational auditsâ—‹
In Canada, auditors general focus on performance audits, sometimes called
value for money
audits
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public sector audits that encompass economy, efficiency, and effectiveness.
•
Government auditors
Audit returns of tax payers to see if they have complied with tax laws•
Solely compliance audits
•
CRA auditors
Investigate F/S fraud, asset misappropriation, money laundering, bribery, theft of information via
computer hacking
•
Canadian assurance and auditing standards require a fraud risk assessment as part of the F/S audit•
"investigative mindset" is what differs these mans from other auditors
•
Fraud auditing focuses on the risk of fraud, the probability and occurrence of fraud, and the
significance of a fraud event or series of events.
•
Forensic accountants and fraud auditors
Public accountants
AFM 351 Page 3
Document Summary
Includes the subject matter information and a conclusion as to whether the subject matter conforms to the applicable criteria. This type of engagement is called a direct engagement. Financial statement audit- an audit conducted to determine whether the f/s of an entity are presented fairly, in all material respects, in conformity with an applicable financial reporting framework. Compliance audit- an audit performed to determine whether an entity complied with specific laws, regulations, rules, or provision of contracts or grant agreements. Operational audit- a review of any part of an organization"s operating procedures and methods for the purpose of evaluating economy, efficiency, and effectiveness. This audit is direct reporting engagement - the auditor forms an opinion on the subject matter directly. An independent, objective assurance and consulting activity designed to add value and improve an organization"s operations. Both of these audits add value and can improve organizational operations.
