AUDITOBJECTIVES

Financial Auditing 1

Group 7

AICPA, 2015 Section 200.04

“ The purpose of an audit is to provide financial statement

users with an opinion by the auditor on whether the financial

statements are presented fairly, in all material respects, in accordance

with an applicable financial reporting framework, which

enhances the degree of confidence that intended users can place in

the financial statements.”

WHY AUDITORS NEED TO USEAUDIT OBJECTIVES?

THE OBJECTIVES REMAIN THE SAME

but THE EVIDENCE VARIESfrom audit to audit

steps to develop

audit objectives5 Know general AOs for classes of tra

nsactions,

accounts, and disclosures

OBJECTIVE OF CONDUCTING AN AUDIT OF FINANCIAL STATEMENTS

WHY WE NEED TO

DEVIDE FINANCIAL

STATEMENTS INTO

CYCLES?

CYCLES APPROACHto keep closely related types (or classes) of transactions

and account balances in the same segment

Sales & CollectionAcquisition & PaymentPayroll & PersonnelInventory & WarehousingCapital acquisition & Repayment

5

RELATIONSHIPS among CYCLES

SETTING AUDIT OBJECTIVESWhy the auditor obtain a combination by auditing classes of transactions & ending balance in account?

MANAGEMENT ASSERTIONS

the representations of management about components in

FSscan be implicitly or explicitly asserted

MANAGEMENT ASSERTIONS

What is the relationship betweenManagement Assertions and Auditing Objectives?

MANAGEMENT ASSERTIONS

Auditing Objectives FOLLOWManagement Assertions

MANAGEMENT ASSERTIONS

to justify the management assertions of the entity

to assess material misstatements, audit risks, etc. to plan appropriate AOs.

MANAGEMENT ASSERTIONS

TRANSACTION, BALANCE & DISCLOSURE-

RELATED AUDIT

OBJECTIVES

TRANSACTION-RELATEDAUDIT OBJECTIVES

AND IN ACCORDANCE WITH MANAGEMENT ASSERTIONS

CLASSIFICATION 

POSTING AND SUMMARIZATION

OCCURRENCECOMPLETENESS 

 ACCURACY   

TIMING

STEVE JOBS

MANAGEMENT AUDITOR

NHAT MINH

OCCURENCE OCCUREN

CECOMPLETE

NESS COMPLETENESS

ACCURACYACCURACYPOSTING &SUMMARIZATION

CLASSIFICATION CLASSIFICATI

ONCUTOFF TIMING

GOODS IN DELIVERYTRANSACTION RECORDED

CORRECT AMOUNT OF GOODSINCLUDED IN MASTER FILE

PROPERLY CLASSIFIEDRECORDED ON THE CORECT DATES

1 2

3

4

56

7

8

EXISTENCECOMPLETENESS

ACCURACY

CUTOFF

CLASSIFICATION

DETAIL TIE-IN

RELIZABLE VALUE

RIGHTS & OBLIGATIONSBALANCE-RELATEDAUDIT OBJECTIVES

AND IN ACCORDANCE WITH MANAGEMENT ASSERTIONS

MANAGEMENT ASSERTIONS AUDIT OBJECTIVES

VSEXISTENCE EXISTENCECOMPLETENESS COMPLETENESS

VALUATION & ALLOCATIONDETAIL TIE-IN

CLASSIFICATIONCUTOFF

ACCURACY

RELIZABLE VALUERIGHTS & OBLIGATIONS RIGHTS & OBLIGATIONS

OCCURENCE & RIGHTS & OBLIGATIONS

COMPLETENESS

ACCURACY &

VALUATIONCLASSIFICAT

ION & UNDERSTAN

DABILITY

PRESENTATION AND DISCLOSURE-RELATED

AUDIT OBJECTIVES

AND IN ACCORDANCE WITH MANAGEMENT ASSERTIONS

HOW AUDIT OBJECTIVES ARE MEET?

HOW AUDIT OBJECTIVE ARE MET?Auditors plan the appropriate combination of:• Audit objectives• The evidence that must be accumulated to meet

AOs

Audit process – a well-defined methodology for organizing an audit to ensure that:• The evidence gathered is both sufficient and

appropriate, and• All required audit objectives are both

specified and met.

HOW AUDIT OBJECTIVE ARE MET?

steps to develop

audit objectives5 Know general AOs for classes of tra

nsactions,

accounts, and disclosures

THANKYOU!