Bus 426 - Chapter 1

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Simon Fraser University
Business Administration
BUS 426
Michael Favere- Marchesi

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 an
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