- An audit is independent examination of financial statements and related information of an entity with a view to express an opinion.
- Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.
Objective of Audit:
The objective of an audit is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework. It is management’s responsibility to prepare the financial statements. Auditor’s responsibility is to give reasonable assurance that the financial statements give a true and fair picture.
- The audit opinion is given on:
i. Whether the financial statements give a true and fair view of the entity’s financial statements; and
ii. Whether they have been properly prepared in accordance with the applicable reporting framework.
- This opinion is reached after:
a. Extensive risk assessment has been performed.
b. Extensive testing of controls and substantive tests on transactions and balances for validity, accuracy and completeness of recording.
c. Extensive verification procedures have been performed to test for existence, ownership, valuation, presentation and disclosure of items in the financial statements.
d. Extensive review of whether the financial statements comply with applicable accounting standards and legal requirements.