Review Chapter 3: Audit On Financial Statement (PSP_DAT5CJune2020)
Review Chapter 3: Audit On Financial Statement (PSP_DAT5CJune2020)
Group member:
Noraiza binti mohd saman (10DAT18F1048)
Nur dayana binti abd karim (10DAT18F1101)
Khir ariffin bin khir azizan (10DAT18F1062)
Nurul nabila binti azmi (10DAT18F1097)
Noratirah adila binti muhairi (10DAT18F1044)
Introduction
When an independent auditor gives his opinion/ report on the financial statement of the company about its true and fair presentation is called audited financial statement.
It is the responsibility of the company’s management is to prepare the company’s financial statements and related disclosures.
A financial statement audit is the examination of an entity's financial statements and accompanying disclosures by an independent auditor. The result of this examination is a report by the auditor, attesting to the fairness of presentation of the financial statements and related disclosures. The auditor's report must accompany the financial statements when they are issued to the intended recipients
Refer to slide for more information:
To get more information about audit financial position, do watch this video:
Watch this powtoon video
Questions:
Group 1: Explain the purpose of auditing the revenue and expenditure components.
Group 2: Explain the purpose of auditing the investment
Group 4: Apply suitable audit objectives and assertions on property, plant and equipment.
Group 5: Explain the purpose of auditing the liabilities.
Group 6: Define the evidence to audit the trade receivables and
trade payable.
Group 7: Define the evidence to audit of property, plant and
equipment.
Group 8: Select the evidence for cash and bank balances.
Comments
The audit's objectives were to determine whether revenues and expenses are recorded accurately, and are fairly stated in the Auxiliary's financial statements, whether the Auxiliary incurred expenses in compliance with prescribed guidelines and bylaws, and whether such expenses were reasonable and appropriate.
Substantiate the existence of priperty,plant and equipment,this may include assets that should have been derecognised following sale,othet transfer of rights or abandonment.
Auditor should verify title deeds,agreements or other ownerdhip documents.
Purpose of auditing the liabilities :
1. To ensure that amounts shown in financial statements are not materially misstated.
2. To search for unrecorded liabilities.
Audit Evidence is the all information used by the auditor in making the conclusion. The basic source of evidence is knowledge, analytical procedures,test of control, and direct test
Audit objectives:
-consider internal control over property, plant and equipment
-determine the existence of recorded property, plant and equipment
-establish the completeness of recorded property, plant and equipment
-establish that the client has ownership rights to the recorded property, plant and equipment
-establish the clerical accuracy of schedules of property, plant and equipment
Assertions:
-Existence:PPE reported on the balance sheet really exists at the reporting date
-Valuation:PPE balances truly reflect their actual economic value as at reporting date
-Completeness:All PPE transactions that should have been recoded have been recoded
-Rights and obligations:The client has ownership rights for PPE as of the reporting date
1)Existence- to ensure that the cash is actually in existence and belong to the company at given date or at the year-end date.
2)Completeness- To ensure that there is no unrecorded cash.
3)Accuracy- To ensure cash at bank stated on the reconciliation is accurate.
4)Cut-off- To ensure that amounts are correctly recorded in the proper period.
5)Presentation and disclosure-To ensure that the cash balance is correctly disclosed in the financial statement.
THE PURPOSE OF AUDITING THE INVESTMENT
• to ensure that purchases and disposal of investment are properly authorized,record and accounted.
• to ensure that investment are properly valued are disclosed in the financial statement.