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OBJECTIVES
Group 6
Alvia 008201705037
Juniati Veronica 008201705052
OBJECTIVE OF CONDUCTING AN AUDIT OF
FINANCIAL STATEMENTS
MANAGEMENT’S RESPONSIBILITIES
6-5
AUDITOR’S RESPONSIBILITIES
AICPA auditing standards state:
Material Versus Immaterial Misstatements:
Misstatements are usually considered material if the combined uncorrected errors and
fraud in the financial statements would likely have changed or influenced the decisions
of a reasonable person using the statements.
Reasonable Assurance:
Reasonable assurance is a high, but not absolute, level of assurance that the financial
statements are free of material misstatements.
Indirect-Effect NoAssurance
FINANCIAL STATEMENT CYCLES
Acommonform of segmenting is called the cycle approach, which divides classes of
transactions and account balances that are closely related into segments.
Example in Figure6-3.
• Sales and collection cycle
• Acquisition and payment cycle
• Payroll and personnel cycle
• Inventory and warehousing cycle
• Capital acquisition and repayment cycle
SETTING AUDIT OBJECTIVES