F8 Audit and assurance

The 1st day class for 2011, i attend F8 class -lecturer-Philip Tan. i would like to share what as i learn at the class. For this papers mostly need to understand the underlying theory of auditing and can apply thet theory relatively basic audit situations. The purpose of an audit is to enhance the degree of confidence of intended users in financial statements. Limitations-Auditors do not cetify the financial statements or guarantee that they are correct. Managemts is responsible for the preparation and fair presentation of these financial statements. Auditors responsibility is to express an opinion on these financial statements based on audit. Auditors need to plan and perform the audit obtain reasonable assurance whether the financial statements are free from material misstatement or error. The materiality -would influence the economic decisions made by a user of the financial statements.

Advantages and disadvantages of an audit
-advantages: A limited liablity company the shareholders access to companies' accounting books and records as a result dependant on information provided to them by the directors.
-advantages: An audit may act as a deterrent againts fraud by employees.
-advantages: Provide constructive advice to management on improving control and information systems.
-advantages: Audited financial statements can also be used to reduce disputes between management.
-disadvantages: Cost
-disadvantages: An audit disrupts the organisation's day to day activities as staff have to spend time providing the auditors with the information and explanations need to form an opinion on financial statements.

That's all for today sharing.