Auditing and assurance revision question and answer

Auditing and Assurance Revision Questions and Answers

Write short notes on the following:
a) Objectives of Audit of the Financial Statement
b) Qualities of an Auditor

a) Answer
In conducting an audit of financial statements, the overall objectives of the auditor are:
 To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereenabling the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework; and
 To report on the financial statements, and communicate as required the NSAs, in accordance with the auditor‟s findings.

Audits are not conducted with the objective of identifying fraud and errors prevalent in the company, but the audit process normally result in identification of fraud or errors while conducting internal control evaluation and using substantive procedures. This is because the auditing standards requires an auditor to bear in mind the possibility of the existence of frauds or errors in the accounts under audit since they may cause the financial position to be mis-stated. So, detection of material frauds and errors as an incidental objective of independent financial auditing flows from the main objective of determining whether or not the financial statements give a true and fair view.

b) Answer
An auditor should adhere to the fundamental principles applicable for the auditor. The fundamental principles are integrity, objectivity, professional competence and due care, confidentiality and professional behavior. The qualities required in and auditor are tact, caution, firmness, good temper, integrity, discretion, industry judgment, patience, clear headiness and reliability. In addition, he must have the shine of culture for attaining a great height. He must

have the highest degree of integrity backed adequate independence. He must have a thorough knowledge of general principles of law which govern matters with which he is likely to be intimate contact. He must pursue an intensive program of theoretical education in subjects like financial and management accounting, general management, business and corporate laws, computer and information systems, taxation, economics etc. An auditor must be honest; i.e.; he must not certify what he does not believe to be true and must take reasonable care and skill before he believes that what he certifies is true.

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