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    Scope of Audit

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    A-wan Safwan
    The scope of an audit refers to the range of activities and time period of records that will be examined. The document outlines several key aspects that define an audit's scope: Legal requirements and professional standards help determine the scope. The scope should cover all relevant aspects of the entity, including all business functions for a comprehensive view. The auditor obtains reliable information and ensures proper communication of information in the financial statements through techniques like compliance testing, evaluation of accounting systems, carrying out tests, and comparing records to statements. Important judgments by management in preparing statements are also considered.

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    Scope of Audit

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    A-wan Safwan
    521 views3 pages
    The scope of an audit refers to the range of activities and time period of records that will be examined. The document outlines several key aspects that define an audit's scope: Legal requirements and professional standards help determine the scope. The scope should cover all relevant aspects of the entity, including all business functions for a comprehensive view. The auditor obtains reliable information and ensures proper communication of information in the financial statements through techniques like compliance testing, evaluation of accounting systems, carrying out tests, and comparing records to statements. Important judgments by management in preparing statements are also considered.

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    Scope of audit

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    The scope of an audit refers to the range of activities and time period of records that will be examined. The document outlines several key aspects that define an audit's scope: Legal requirements and professional standards help determine the scope. The scope should cover all relevant aspects of the entity, including all business functions for a comprehensive view. The auditor obtains reliable information and ensures proper communication of information in the financial statements through techniques like compliance testing, evaluation of accounting systems, carrying out tests, and comparing records to statements. Important judgments by management in preparing statements are also considered.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    521 views3 pages

    Scope of Audit

    Uploaded by

    A-wan Safwan
    The scope of an audit refers to the range of activities and time period of records that will be examined. The document outlines several key aspects that define an audit's scope: Legal requirements and professional standards help determine the scope. The scope should cover all relevant aspects of the entity, including all business functions for a comprehensive view. The auditor obtains reliable information and ensures proper communication of information in the financial statements through techniques like compliance testing, evaluation of accounting systems, carrying out tests, and comparing records to statements. Important judgments by management in preparing statements are also considered.

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    Scope of Audit

    Scope of AuditThe scope of an audit is the determination of the range of the activities and the period
    of records that are to be subjected to an audit examination.

    Scope of an audit are:

    Legal Requirements., Entity Aspects., Reliable Information., Proper Communication., Evaluation.,


    Test., Comparison., Judgments.

    Audit scope are explained below:

    Legal Requirements

    The auditor can determine the scope of an audit of financial statements following the requirements
    of legislation, regulations or relevant professional bodies.

    The state can frame rules for determining the scope of audit work. In the same way, professional
    bodies can make rules to conduct the audit.

    Entity Aspects

    The audit should be organized to cover all aspects of the entity as far as they are relevant to the
    financial statements being audited.

    A business entity has many areas of working. A small entity may have few functions while a large
    concern has many functions. The auditor has to go through all the functions of the business.

    The audit report should cover all functions so that the reader may know about all the workings of a
    concern.

    Reliable Information

    The auditor should obtain reasonable assurance as to whether the information contained in the
    underlying accounting records and other source data is reliable and sufficient as the basis for the
    preparation of the financial statements.

    The auditor can use various techniques to test the validity of data. All auditors while doing the audit
    work usually apply the compliance test and substance test. The auditor can show such information in
    the report.
    Proper Communication

    The auditor should decide whether the relevant information is properly communicated in the
    financial statements.

    Accounting is an information system so facts and figures must be so presented that the reader can
    get information about the business entity. The auditor can mention this fact in his report.

    The principles of accounting can be applied to decide about the disclosure of financial information in
    the statements.

    Evaluation

    The auditor assesses the reliability and sufficiency of the information contained in the underlying
    accounting records and other source data by making a study and evaluation of accounting systems
    and internal controls to determine the nature, extent, and timing of other auditing procedures.

    Test

    The auditing assesses the reliability and sufficiency of the information contained in the underlying
    accounting records and other source data by carrying out other tests, inquiries and other verification
    procedures of accounting transactions and account balances as he considers appropriate in the
    particular circumstances.

    There are compliance tests and substantive tests to examine the data. The vouching, verification and
    valuation technique is also used.

    Comparison

    The auditor determines whether the relevant information is properly communicated by comparing
    the financial statements with the underlying accounting records and other source data to see
    whether they properly summarized the transactions and events recorded therein.

    The auditor can compare the accounting records with financial statements to check that the same
    has been processed for preparing the final accounts of a business concern.

    Judgments

    The auditor determines whether the relevant information is properly communicated by considering
    the judgment that management has made in preparing the financial statements, accordingly.
    The auditor assesses the selection and consistent application of accounting policies, how the
    information has been classified and the adequacy of disclosure.

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