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Chapter 1

BUS 426 Chapter Notes - Chapter 1: Financial Statement, Canada Revenue Agency, Internal Control


Department
Business Administration
Course Code
BUS 426
Professor
Michael Favere- Marchesi
Chapter
1

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Chapter 1 - The Auditing Profession
Auditing: The accumulation and evaluation of evidence about
information to determine and report on the degree of
correspondence between the information and established criteria.
Auditing should be done by a competent, independent
person
Components of an Audit
i. Information and Established Criteria: Information must
be in a verifiable form and some standards (Criteria) by which
the auditor can evaluate to
ii. Accumulating and Evaluating Evidence: Evidence is
defined as any information used by the auditor to support the
findings
iii. Competent, Independent Person: Makes sure no biases
and that a person of proper skill is used
iv. Reporting: Must report our findings; an Auditor’s Report
Accounting vs Auditing
Accounting is the recording, classifying and summarizing of
economic events in a logical manner for the purpose of
providing financial information for decision making
Auditing is making sure the accounting information is fairly
stated
Information Risk: The risk that information upon which a business
decision is made inaccurately; ex: Inaccurate financial statements
Auditing helps to reduce this risk
Assurance Engagement: A service where a written
communication is provided expressing an opinion about the
reliability of an assertion (claim, ex: financial statement figures)
made by another party; also called “assurance services
Assurance Services Component: Attestation Service: The auditor
issues a report about the reliability of any information provided by
one party to another (think of it as a small audit/review as
supposed to a formal audit)
Audit of historical financial statements
Review of historical financial statements
Attestation on internal control over financial reporting
Attestation services on information technology
Other attestation services that may be applied to a broad
range of subject matter
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