1、Chapter 3 Auditing Objectives and Audit Process 3.1 Overall Audit Objective and Responsibilities 3.2 Management Assertions 3.3 Specific Audit Objectives 3.4 Audit Process Learning Objectives After studying this chapter, you should be able to 1. Comprehend the objective of an audit of financial state
2、ments and the definition of management assertions.2. Distinguish managements responsibilities for preparing financial statements from the auditors responsibilities for verifying those financial statements.3. Explain why the auditor is responsible for reasonable but not absolute assurance.4. Remember
3、 the transaction-related and balance-related audit objectives.5. Learn the audit process. Before beginning the study of how to conduct an audit, it is necessary to understand the overall objectives of the audit, the auditors responsibilities in conducting the audit, and the specific objectives the a
4、uditor tries to accomplish. Without an understanding of these topics, planning and accumulating audit evidence during the audit can not be done effectively. 3.1 Overall Audit Objective and Responsibilities3.1.1 Overall Audit Objective 3.1.2 Managements Responsibilities3.1.3 Auditors Responsibilities
5、 Glossary overall audit objective 总体审计目标总体审计目标managements responsibilities管理层责任管理层责任auditors responsibilities 审计师的责任审计师的责任 3.1.1 Overall Audit Objective The overall objective of the audit of financial statements by the independent auditor is the expression of an opinion on the fairness with which th
6、ey present fairly, in all material respects, financial position, results of operations, and its cash flows in conformity with generally accepted accounting principles. The overall objective of the audit of financial statements emphasizes issuing an opinion on financial statements. The only reason au
7、ditors accumulate evidence is to enable them to reach conclusions about whether financial statements are fairly stated in all material respects and issue an appropriate audit report. The objective of an audit of financial statementsThe objective of an audit of financial statements is to enable the a
8、uditor, by conducting an audit, to express an opinion on the following aspects of the financial statements:(a) Whether the financial statements are prepared in accordance with the requirements of the applicable accounting standards; and(b) Whether the financial statements are presented fairly, in al
9、l material respects, the financial position, operating results and cash flows of the entity. 在执行财务报表审计工作时，注册会计师的总体目标总体目标是：（一）对财务报表整体是否不存在由于舞弊（一）对财务报表整体是否不存在由于舞弊或错误导致的重大错报获取合理保证，使得或错误导致的重大错报获取合理保证，使得注册会计师能够对财务报表是否在所有重大注册会计师能够对财务报表是否在所有重大方面按照适用的财务报告编制基础编制发表方面按照适用的财务报告编制基础编制发表审计意见；审计意见；（二）按照审计准则的规定，根据审
10、计结果（二）按照审计准则的规定，根据审计结果对财务报表出具审计报告，并与管理层和治对财务报表出具审计报告，并与管理层和治理层沟通。理层沟通。 3.1.2 Managements Responsibilities The responsibility for adopting sound accounting policies, maintaining adequate internal control, and making fair representations in the financial statements rests with management rather than wi
11、th the auditor. Because they operate the business daily, a companys management knows more about the companys transactions and related assets, liabilities, and equity than the auditor does. In contrast, the auditors knowledge of these matters and internal control is limited to those acquired during t
12、he audit. Although the management has the responsibility for the preparation of the financial statements and the accompanying footnotes, it is acceptable for an auditor to draft the financial statements for the client or to offer suggestions for clarification. In the event that management insists on
13、 financial statement disclosure that the auditor finds unacceptable, the auditor can either issue an adverse or qualified opinion or withdraw from the engagement. 3.1.3 Auditors Responsibilities An auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whethe
14、r the financial statements are free of material misstatement, which caused by error or fraud. Due to the nature of the audit evidence and the characteristics of fraud, the auditor is able to obtain reasonable, but not absolute, assurance that material misstatements are detected. The auditor has no r
15、esponsibility to plan and perform the audit to obtain reasonable assurance those misstatements, which caused by errors or fraud, that are not material to the financial statements are detected. 与管理层和治理层责任相关的执行审计工作的前提（以下与管理层和治理层责任相关的执行审计工作的前提（以下简称简称执行审计工作的前提执行审计工作的前提），是指管理层和治理层（如适），是指管理层和治理层（如适用）认可并理解
16、其应当承担下列责任，这些责任构成注册用）认可并理解其应当承担下列责任，这些责任构成注册会计师按照审计准则的规定执行审计工作的基础：会计师按照审计准则的规定执行审计工作的基础：（一）按照适用的财务报告编制基础编制财务报表，并使（一）按照适用的财务报告编制基础编制财务报表，并使其实现公允反映（如适用）；其实现公允反映（如适用）；（二）设计、执行和维护必要的内部控制，以使财务报表（二）设计、执行和维护必要的内部控制，以使财务报表不存在由于舞弊或错误导致的重大错报；不存在由于舞弊或错误导致的重大错报；（三）向注册会计师提供必要的工作条件（三）向注册会计师提供必要的工作条件，包括允许注册，包括允许注册会
17、计师接触与编制财务报表相关的所有信息（如记录、文会计师接触与编制财务报表相关的所有信息（如记录、文件件 和其他事项），向注册会计师提供审计所需的其他信息，和其他事项），向注册会计师提供审计所需的其他信息，允许注册会计师在获取审计证据时不受限制地接触其认为允许注册会计师在获取审计证据时不受限制地接触其认为必要的内部人员和其他相关人员。必要的内部人员和其他相关人员。 While the auditor is responsible for expressing an audit opinion on the financial statements in accordance with China
18、 Standards on Auditing, the responsibility for the preparation of the financial statements in accordance with the requirements of the applicable accounting standards is that of management of the entity, with oversight from those charged with governance.The audit of the financial statements does not
19、relieve management or those charged with governance of their responsibilities. 财务报表是由被审计单位管理层在治理层的财务报表是由被审计单位管理层在治理层的监督下编制的。监督下编制的。审计准则不对管理层或治理审计准则不对管理层或治理层设定责任，也不超越法律法规对管理层或层设定责任，也不超越法律法规对管理层或治理层责任作出的规定。治理层责任作出的规定。管理层和治理层（如适用）认可与财务报表管理层和治理层（如适用）认可与财务报表相关的责任，是注册会计师执行审计工作的相关的责任，是注册会计师执行审计工作的前提，构成注册会计
20、师按照审计准则的规定前提，构成注册会计师按照审计准则的规定执行审计工作的基础。执行审计工作的基础。财务报表审计并不减轻管理层或治理层的责财务报表审计并不减轻管理层或治理层的责任。任。 An auditor conducting an audit in accordance with CSAs (China Standards on Auditing) obtains reasonable assurance that the financial statements taken as a whole are free from material misstatement. An auditor
21、 cannot obtain absolute assurance that the financial statements taken as a whole are free from material misstatement because there are inherent limitations in an audit that affect the auditors ability to detect material misstatements. These limitations result from factors such as the following: The
22、use of testing;The inherent limitations of internal control;The fact that most audit evidence is persuasive rather than conclusive;The work undertaken by the auditor to form an audit opinion is permeated by judgment;There are transactions and events of special nature that may affect the persuasivene
23、ss of audit evidence. The use of testingMost audit evidences result from testing a sample of a population such as accounts receivable or inventory. Sampling inevitably includes some risk of not uncovering a material misstatement. The inherent limitations of internal control Fraudulently prepared fin
24、ancial statements are often extremely difficult, if not impossible, for the auditor to detect, especially when there is collusion among management. The fact that most audit evidence is persuasive rather than conclusiveAccounting presentations contain complex estimates, which inherently involve uncer
25、tainty and can be affected by future events. As a result, the auditor has to rely on evidence that is persuasive, but not convincing. The work undertaken by the auditor to form an audit opinion is permeated by judgmentThe areas to be tested; the type, extent, and timing of those tests; and the evalu
26、ation of test results require significant auditor judgment. Even with good faith and integrity, auditors may make mistakes and errors in judgment. 审计的固有限制源于财务报告的性质、审计程序的性质和在合理的时间内以合理的成本完成审计的需要。3.2 Management Assertions3.2.1 Definition of Management Assertions3.2.2 Categories of Management Assertions
27、 Glossary management assertions 管理层认定管理层认定assertions about existence or occurrence 存在或发存在或发生认定生认定assertions about completeness完整性认定完整性认定assertions about valuation or allocation 计价或分计价或分摊认定摊认定assertions about rights and obligations 权利和义权利和义务认定务认定assertions about presentation and disclosure 表达表达与披露认定与
28、披露认定 3.2.1 Definition of Management Assertions Assertions are the explicit or implicit expressions made by management regarding the recognition, measurement, presentation and disclosure of the various elements of financial statements.认定是指管理层在财务报表中作出的明确或隐含的表达，注册会计师将其用于考虑可能发生的不同类型的潜在错报。Representations
29、 by management, explicit or otherwise, that are embodied in the financial statements. Management assertions are directly related to generally accepted accounting principles. These assertions are part of the criteria that management uses to record and disclose accounting information in financial stat
30、ements. Auditors must therefore understand the assertions to do adequate audits. 3.2.2 Categories of Management Assertions Assertions about Existence or Occurrence Assertions about Completeness Assertions about Valuation or Allocation Assertions about Rights and Obligations Assertions about Presenta
31、tion and Disclosure Assertions about Existence or Occurrence Assertions about existence deal with whether assets, obligations, and equities included in the balance sheet actually existed on the balance sheet date. Assertions about occurrence concern whether recorded transactions included in the fina
32、ncial statements actually occurred during the accounting period. For example, management asserts that merchandise inventory included in the balance sheet exists and is available for sale at the balance sheet date. Similarly, management asserts that recorded sales transactions represent exchanges of
33、goods or services that actually took place. Assertions about Completeness These management assertions state that all transactions and accounts that should be presented in the financial statements are included. For example, management asserts that all sales of goods and services are recorded and incl
34、uded in the financial statements. Similarly, management asserts that notes payable in the balance sheet include all such obligations of the entity. The completeness assertion deals with matters opposite from those of the existence or occurrence assertions. The completeness assertion is concerned wit
35、h the possibility of omitting items from the financial statements that should have been included, whereas the existence or occurrence assertion is concerned with inclusion of amounts that should not have been included. Thus, violations of the existence assertions relate to account overstatements, wh
36、ereas violations of the completeness assertions relate to account understatements. The recording of a sale that did not take place would be a violation of the occurrence assertions, whereas the failure to record a sale that did occur would be a violation of the completeness assertions. Assertions ab
37、out Valuation or Allocation These assertions deal with whether asset, liability, equity, revenue, and expense accounts have been included in the financial statements at appropriate amounts. For example, management asserts that assets are properly recorded at historical cost and that such cost is sys
38、tematically allocated to appropriate accounting periods through depreciation. Similarly, management asserts that accounts receivable included in the balance sheet are stated at net realizable value. Assertions about Rights and Obligations These management assertions deal with whether assets are the
39、rights for entity and liabilities are the obligations of the entity at a given date. For example, management asserts that assets are owned by the company or that amounts capitalized for leases in the balance sheet represent the cost of the entitys rights to leased property and that the corresponding
40、 lease liability represents an obligation of the entity. Assertions about Presentation and Disclosure These assertions deal with whether components of the financial statements are properly combined or separated, described, and disclosed. For example, management asserts that obligations classified as
41、 long-term liabilities in the balance sheet will not mature within 1 year. Similarly, management asserts that amounts presented as extraordinary items in the income statement are properly classified and described. 3.3 Specific Audit Objectives3.3.1 The Use of Assertions to Obtain Audit Evidence3.3.2
42、 Transaction-related audit objectives3.3.3 Balance-related audit objectives3.3.4 Presentation and disclosure-related audit objectives Glossary specific audit objectives 具体审计目标具体审计目标transaction-related audit objectives 与交易相关的与交易相关的审计目标审计目标balance-related audit objectives 与余额相关的审与余额相关的审计目标计目标presentat
43、ion and disclosure-related audit objectives 与列报相关的审计目标与列报相关的审计目标cutoff 截止截止classification 分类分类 3.3.1 The Use of Assertions to Obtain Audit Evidence Management is responsible for the fair presentation of financial statements that reflect the nature and operations of the entity. In representing that t
44、he financial statement are presented fairly, in all material respects, in accordance with generally accepted accounting principles, management implicitly or explicitly makes assertions regarding the recognition, measurement, presentation and disclosure of the various elements of financial statements
45、 and related disclosures. The auditor should use assertions for classes of transactions, account balances, and presentation and disclosures in sufficient detail to form a basis for the assessment of risks of material misstatement and the design and performance of further audit procedures. The audito
46、r uses assertions in assessing risks by considering the different types of potential misstatements that may occur, and thereby designing audit procedures that are responsive to the assessed risks. The auditors audit objectives follow and are closely related to management assertions. That is not surp
47、rising because the auditors primary responsibility is to determine whether management assertions about financial statements are justified. Auditors should classify specific audit objectives into following three categories. 3.3.2 Transaction-related audit objectives Transaction-related audit objectiv
48、es are intended to provide a framework to help the auditor accumulate sufficient competent evidence and decide the proper evidence to accumulate for classes of transactions given the circumstances of engagement. The objectives remain the same from audit to audit, but the evidence varies, depending o
49、n the circumstances. Assertions about classes of transactions and events for the period under audit used by the auditor fall into the following categories: Occurrence Completeness Accuracy Cutoff Classification Occurrence Transactions and events that have been recorded have occurred and pertain to t
50、he entity. Inclusion of a sale in the sales journal when no sale occurred violates the occurrence objectives. Completeness All transactions and events that should have been recorded have been recorded. Failure to include a sale in the sales journal and general ledgers when a sale occurred violates t
