unitAuditing.docx

unitAuditing.docx

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unitAuditing

unit13Auditing

Unit13

Auditing

Anauditisanexercisewhoseobjectiveistoenableauditorstoexpressanopinionwhetherthefinancialstatementsareprepared,inallmaterialrespects,inaccordancewithanidentifiedfinancialreportingframework4>>.

Auditprovideshigh,butnotabsolutelevelofassurance,expressedintheauditreportasreasonableassurance>.

Reasonableassuranceisnotaguaranteeofcorrectness,butanassuranceoftruthandfairnesswithinareasonablemarginoferror>.

Content

Ⅰ>.AuditingStandardandProfessionalEthics

Ⅱ>.TypesofAuditing

Ⅲ>.AuditingProcedures

Ⅳ>.AuditReport

Ⅴ>.TypesofAuditReport

Ⅵ>.Asampleofauditreport（CSAC）

General

Standards

Fieldwork

Standards

Reporting

Standards

1>.AuditingStandard

Ⅰ>.AuditingStandardandProfessionalEthics

GeneralStandards

1>.Theauditormusthaveadequatetechnicaltrainingandproficiencytoperformtheaudit>.

2>.Theauditormustmaintainindependenceinmentalattitudeinallmattersrelatedtotheaudit>.

3>.Theauditormustusedueprofessionalcareduringtheperformanceoftheauditandthepreparationofthereport>.

FieldworkStandards

1>.Theauditormustadequatelyplantheworkandmustproperlysuperviseanyassistants>.

2>.Theauditormustobtainasufficientunderstandingoftheentityanditsenvironment,includingitsinternalcontrol,toassesstheriskofmaterialmisstatementofthefinancialstatementswhetherduetoerrororfraud,andtodesignthenature,timing,andextentoffurtherauditprocedures>.

3>.Theauditormustobtainsufficientappropriateauditevidencebyperformingauditprocedurestoaffordareasonablebasisforanopinionregardingthefinancialstatementsunderaudit>.

ReportingStandards

1>.Theauditormuststateintheauditor'sreportwhetherthefinancialstatementsarepresentedinaccordancewithgenerallyacceptedaccountingprinciples>.

2>.Theauditormustidentifyintheauditor'sreportthosecircumstancesinwhichsuchprincipleshavenotbeenconsistentlyobservedinthecurrentperiodinrelationtotheprecedingperiod>.

3>.Whentheauditordeterminesthatinformativedisclosuresarenotreasonablyadequate,theauditormustsostateintheauditor'sreport>.

4>.Theauditormusteitherexpressanopinionregardingthefinancialstatements,takenasawhole,orstatethatanopinioncannotbeexpressed,intheauditor'sreport>.

Whentheauditorcannotexpressanoverallopinion,theauditorshouldstatethereasonsthereforeintheauditor'sreport>.Inallcaseswhereanauditor'snameisassociatedwithfinancialstatements,theauditorshouldclearlyindicatethecharacteroftheauditor'swork,ifany,andthedegreeofresponsibilitytheauditoristaking,intheauditor'sreport>.

2>.ProfessionalEthics

（a）Integrity

Aprofessionalaccountantshouldbestraightforwardandhonestinallprofessionalandbusinessrelationships>.

（b）Objectivity

Aprofessionalaccountantshouldnotallowbias,conflictofinterestorundueinfluenceofotherstooverrideprofessionalorbusinessjudgments>.

（c）ProfessionalCompetenceandDueCare

Aprofessionalaccountanthasacontinuingdutytomaintainprofessionalknowledgeandskillatthelevelrequiredtoensurethataclientoremployerreceivescompetentprofessionalservicebasedoncurrentdevelopmentsinpractice,legislationandtechniques>.

（d）Confidentiality

Aprofessionalaccountantshouldrespecttheconfidentialityofinformationacquiredasaresultofprofessionalandbusinessrelationshipsandshouldnotdiscloseanysuchinformationtothirdpartieswithoutproperandspecificauthorityunlessthereisalegalorprofessionalrightordutytodisclose>.

（e）ProfessionalBehavior

Aprofessionalaccountantshouldcomplywithrelevantlawsandregulationsandshouldavoidanyactionthatdiscreditstheprofession>.

External

Internal

Governmental

Threegroupsofauditing

Ⅱ>.TypesofAuditing

Externalauditingreferstotheevaluationoffinancialstatementspreparedbythemanagementfortheuseofexternalusersincludingstockholder,creditors,bankers,potentialinvestorsandregulatoryagencies,etc>.

Internalauditingistheindependentevaluationandappraisalfunctionestablishedwithinanorganizationtoassessitsownactivities>.

Internalauditorsareemployeesofcompanyratherthanindependentoutsiders>.

Governmentauditingevaluatesawiderangeoforganizationsandinstitutions:

agenciesownedbythegovernmentandtheagenciesthegovernmentisresponsiblefor>.

Ⅲ>.AuditingProcedures

Thepurposeofauditproceduresistoprovidedetailedauditstepstobeperformedduringtheauditfieldworkthatwillachievethespecificauditobjectives>.

Inconjunctionwiththeriskassessment,auditprocedureswillbedevelopedbytheauditorandapprovedbyauditmanagementpriortoperformanceoftheauditprocedures>.

Ⅲ>.AuditingProcedures

1>.Engagementletter

Itspurposeistosetdownthecontractualrelationshipinwrittenformbetweentheclientandtheaccountingfirm>.Issueslikeobjectivesoftheengagement,thescopeoftheaudit,responsibilitiesanddutiesofbothpartiesaresetforthintheletter>.

2>.Riskassessmentandauditplanning>.

Auditorsshouldunderstandthebusinessofthecompany,theenvironmentinwhichitoperates,includingrelevantindustry,otherexternalfactors,thenature,etc>.

3>.Internalcontroltesting

Evaluatetheeffectivenessofinternalcontroltodeterminetheextenttowhichtheycanrelyontheclients’internalcontrol

4>.Substantiveprocedures

Conductcomprehensivetesttocollectsufficientandappropriateevidencesupportingauditconclusion>.

5>.Auditreport

Note:

Duringthecourseoftheaudit,conditionsmayarisewhichwarrantrevisingtheauditprocedures,scope,orbudgetedhours>.Theauditorshouldevaluatethesituation,maketimelyrecommendationstoauditmanagement,andobtainapprovalbeforeincorporatinganychanges>.

Ⅳ>.AuditReport

AuditreportreferstothewrittendocumentwhichexpressesCPA’sauditopinionontheclient’sfinancialstatement>.

Title

TheAddressee（收件人）

TheScopeParagraph

TheOpinionParagraph

Signature,stampsandaccountingfirm’saddress

Thedateoftheauditreport

TheScopeParagraph

Thescopeparagraphoftheauditreportshouldspecifythefollowingmatters:

Thenameoftheauditedfinancialstatementsandthedateofeachstatement;

Theaccountingresponsibilityandtheauditresponsibility,and

Themajorauditproceduresperformed>.

TheOpinionParagraph

Theopinionparagraphoftheauditreportshouldspecifythefollowingmatters:

WhetherthepreparationofthefinancialstatementscomplieswiththerequirementsofboththeGAAPandotherrelevantfinancialandaccountinglawsandregulations>.

Whetherthefinancialstatementspresentfairly,inallmaterialaspects,thefinancialpositionoftheauditedcompany,anditsoperatingresultsandcashflowsfortheauditedperiod>.

Whethertheaccountingtreatmentsareconsistentlyapplied>.

Ⅴ>.TypesofAuditReport

AuditReport

Standardreport

Non-standardreport

Adversereport

Qualifiedreport

Unqualifiedopinionwith

explanatoryparagraph

Non-unqualifiedreport

Disclaimerreport

Unqualifiedreport

Thefollowingcriteriashouldbesatisfiedwith:

（1）ThefinancialstatementsarefairlypreparedonthebasisofGAAPandotheracceptableaccountingbasesandpolicies>.

（2）Thestatementscomplywithstatutoryrequirementsandrelevantregulations>.

（3）the6><#00aa00'>viewpresentedbythefinancialstatementsisconsistentwiththeauditor’sknowledgeoftheauditedcompany>.

（4）Thereisadequatedisclosureofallmaterialrelevanttothefinancialstatements>.

Unqualifiedopinionwithexplanatoryparagraph

Ifthefinancialstatementshavebeenpreparedfairlybuttherehasbeendoubtononematerialmatter,theauditorwilladdexplanatorylanguagetoit>.

Anunqualifiedopinionisissuedwhen:

（1）Thescopeoftheauditingisrestrictedbytheauditor’sknowledge,thecompany’srecordsorotherreasons>.

（2）Thereisaninconsistencyintheapplicationofaccountingprinciples>.

（3）Amatterisputinhighlight>.

（4）There’sajustifieddeparturefromofficiallyrecognizedaccountingprinciples>.

（5）There’sanuncertaintyaboutamatterthatcouldhaveamaterialimpactonthefinancialstatements>.

Qualifiedreport

Aqualifiedopinionisexpressedwhen:

（1）Theauditedcompanyrefusetoadjustthetreatmentofanindividualmaterialaccountingtransaction,ortoadjustthepresentationofanindividualmaterialiteminthefinancialstatementswhichisnotaccordancewithGAAPandotherrelevantfinancialandaccountinglawsandregulation>.

（2）AuditevidencecannotbeobtainedasrequiredintheIndependentAuditingStandards,duetoasignificantlimitationontheauditscopeoncertainaspects>.

（3）Theapplicationofindividualmaterialaccountingtreatmentsisnotconsistent>.

Adverseopinion

Anadverseopinionisexpressedwhen:

（1）TheapplicationofaccountingtreatmentsseriouslyviolatestherequirementsofGAAPorotherrelevantfinancialandaccountinglawsandregulationsandtheauditedcompanyrefusestomakeadjustments>.

（2）Thefinancialstatementsseriouslydistortthefinancialposition,operatingresultsandchangesinthefundsoftheauditedcompany,andtheauditedcompanyrefusestomakeadjustments>.

Disclaimerofopinion

AdisclaimerofopinionshouldbeexpressedwhentheCPAcannotobtainthenecessaryauditevidenceduetoaseverelylimitedauditscopeimposedbytheclientandit’ssopervasivethattheauditorisunabletoformanauditopiniononthefinancialstatementsasawhole>.