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Summary Ch 1 The Demand for Audit and Other Assurance Services
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The summary covers the material of chapter 1 about demand for audit and other assurance services
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Chapter 1The Demand for Audit and Other Assurance
Services
Nature of Auditing
“Auditing is 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.”
Information and Established Criteria
To do an audit, there must be information in a verifable and some
standards by which the auditor can evaluate the information.
Accumulating and Evaluating Evidence
Evidence is any information used by the auditor to determine whether the
information being audited is stated in accordance with the established
criteria.
The forms of evidence:
- Electronic and documentary data about transactions
- Written and electronic communication with outsiders
- Observations by the auditor
- Oral testimony of the auditee (client)
Competent, Independent Person
The auditor must be qualifed to understand the criteria used and must
be competent to know the types and amount of evidence to accumulate in
order to reach the proper conclusion after examining the evidence. The
auditor must also have an independent mental attitude.
Reporting
It is the fnal stage in the auditing process. The activity is preparing the
audit report, which communicates the auditor’s fndings to users.
Distinction Between Auditing and Accounting
Accounting is the recording, classifying, and summarizing of economic
events in a logical manner for the purpose of providing fnancial
information for decision making.
Accountants : preparing for the accounting information,
develop a system to make sure that the entity’s economic
events are properly recorded on a timely basis and at a
reasonable cost.
Auditor : understand the accounting procedures & process
expertise in the accumulation and interpretation of audit
evidence.
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