Unit Two: Auditing Profession and GAAS
Unit Two: Auditing Profession and GAAS
1-5
Why Audit ?
the public.
Auditing profession
statements are fair to all parties and not biased to benefit one
group at the expense of another.
This responsibility to serve the public interest must be a basic
only client.”
Auditing profession
1. Responsibilities:
Professionals should exercise sensitive and
moral judgments in all their activities.
3. Integrity:
Members should perform all responsibilities
with integrity to maintain public confidence.
5. Due care:
Members should observe the profession’s
standards and strive to improve competence.
Ideal conduct
Principles
by practitioners
Minimum level
Rules of
of conduct by
conduct
practitioners Substandard
conduct
Auditing profession
Name of the audit firm and signature: The name and the
signature identify the audit firm or practitioner that has
performed the audit. Typically, the firm’s name is used, since
the entire audit firm has the legal and professional
responsibility to make certain the quality of the audit meets
professional standards.
Date of audit report: The appropriate date of the audit report
is the one on which the field work has been completed. This
date is important because it represents the time limit on the
auditors’ responsibility. The auditor does not have any
responsibility to make any enquiries after this date.
Audit reports
Types of audit report: There are four types of audit
reports that might be issued by the auditors.
These are:
1. An unqualified opinion
2. Qualified opinion
3. An adverse opinion
4. Disclaimer opinion
Audit reports
The Unqualified report: The most common type of
audit report is the standard unqualified audit report.
This report represents a “clean bill of health” and
may be issued when
there are no material departures from generally
accepted accounting principles,
no significant scope limitations preventing the
gathering of necessary evidence and
when no conditions requiring explanatory language
exist.
Audit reports
The unqualified report is issued when the following conditions have been
met:
All statements- balance sheet, income statement, statement of retained
earnings and cash flow statements are included in the audited financial
statements
When standards of auditing are applied in all respects of the engagement.
When sufficient evidence has been accumulated and the auditor has
conducted the audit in a manner that enables him to conclude that three
standards of field work have been met.
The financial statements are presented in accordance with generally
following conditions:
If there has been a severe scope limitation that prevents the
procedures;
If the effect of the scope limitation is so significant that the auditor
The scope paragraph is omitted-since the auditor does not undertake auditing.
End of Chapter 2