Transcript スライド 1 - Concord University

By: Stephanie Wallace, Yoichi
Miyahira, Rui Matsuura
The word audit comes from the Latin word
audire meaning “to hear.”
Modern meanings for audit are:
 Review
 Check
 Inspection
 Examination
 Assessment
 Appraisal
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Auditing is a systematic process of objectively
obtaining and evaluating evidence regarding
assertions about economic actions.
Financial Audits In a financial audit, the
assertions about which the auditor seeks
objective evidence relate to the reliability and
integrity of financial and, occasionally,
operating information.
Auditing is a systematic process
of objectively obtaining and
evaluating evidence regarding
Financial Statements assertions about economic
(including footnotes)
actions and events to ascertain
the degree of correspondence
between the assertions and
GAAP
established criteria and
Auditor's Report/
communicating
the
results
to
Persons who rely on
Other Reports
interested
users.
the financial reports
•Creditors
•Investors
Source: American Accounting Association Committee on Basic Auditing Concepts.
1973. A Statement of Basic Auditing Concepts, American Accounting Association
(Sarasota, FL).
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Today’s information
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More complex
Demanded by remote users
Demanded in a more timely manner
Has far reaching consequences
Information risk
the risk (probability) that the information
(mainly financial) disseminated by a company
will be materially false or misleading.
 users demand an independent third party
assessment of the information

OBTAIN
(OR RETAIN)
CLIENT
ENGAGEMENT RISK
PLANNING
ASSESSMENT
EVIDENCE
GATHERING
REPORTING
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In response to several accounting related corporate
scandals Congress passed the Sarbanes-Oxley Act
The Act’s major provisions include:
 Requirement of CEO/CFO certification of financial
statements
 Requirement of auditor examination of company
internal controls
 Creation of the Public Company Accounting
Oversight Board (PCAOB) to serve as an auditing
profession “watchdog.”
 Prohibition of certain client services by firms
conducting a client’s audit.

Professional skepticism - auditor’s questioning,
evaluative, attitude toward evidence
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Management’s assertions without sufficient corroboration.
Financial trends need investigation
Documents are checked for authenticity or alteration
Ask questions, get answers, then verify the answers.
A potential conflict of interest always exists between
the auditor and the client.

Sarbanes-Oxley and the PCAOB prohibit
professional service firms from providing any of the
following services to an audit client:
1) bookkeeping and related services
2) design or implementation of financial information
3)
4)
5)
6)
7)
8)
systems
appraisal or valuation services
actuarial services
internal audit outsourcing
management or human resources services
investment or broker/dealer services
legal and expert services (unrelated to the audit)

Internal Auditing is an independent, objective
assurance and consulting activity designed to add
value and improve an organization's operations. It
helps an organization accomplish its objectives by
bringing a systematic, disciplined approach to
evaluate and improve the effectiveness of risk
management, control, and governance processes.
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NYSE and SOX requires publicly traded
companies to have internal audit.
Many of private companies also have
established internal audit, although they are
not required.
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The internal auditors' are part of the
organization.
Objectives are determined by professional
standards, the board, and management.
Primary clients are management and the board.
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External auditors are not part of the
organization, but are engaged by it.
Objectives are set primarily by statute and their
primary client - the board of directors.
CONCLUSIONS
•Nobody
likes to be
audited……
•It is a means to have
continuous
improvement