BASIC PRINCIPLES GOVERNING THE AUDIT.pptx

AUDITING PRINCIPLES

1. BASIC PRINCIPLES GOVERNING THE AUDIT

2. BASIC PRINCIPLES GOVERNING THE AUDIT 1.Integrity Auditors must be honest, ethical, and straightforward in their work. This includes providing accurate and truthful findings, regardless of external pressures or conflicts of interest.

3. BASIC PRINCIPLES GOVERNING THE AUDIT 2. Objectivity Auditors must maintain impartiality and independence throughout the audit process. They should not be influenced by personal interests, relationships, or biases, ensuring that their judgment remains free from conflicts of interest.

4. BASIC PRINCIPLES GOVERNING THE AUDIT 3. Confidentiality Auditors must respect the confidentiality of the information they come across during the audit process. They are not permitted to disclose or misuse sensitive information for personal gain or any unauthorized purpose.

5. BASIC PRINCIPLES GOVERNING THE AUDIT 4. Independence This is a core principle that ensures the auditor remains free from influences that could compromise their objectivity. Independence is typically divided into: Independence of mind : The auditor’s state of mind or ability to make decisions free from external pressure or bias. Independence in appearance : The perception that the auditor is independent to external stakeholders, ensuring trust in the audit's objectivity.

6. BASIC PRINCIPLES GOVERNING THE AUDIT 5. Evidence-Based Auditing relies on obtaining sufficient, appropriate evidence to support audit findings. The auditor must gather evidence through various procedures, such as testing transactions, inspecting documents, and interviewing relevant personnel, to form an opinion on the financial statements' accuracy.

7. BASIC PRINCIPLES GOVERNING THE AUDIT 6. Audit Planning Effective audit planning is essential to ensure that the audit is conducted efficiently and thoroughly. Planning involves understanding the entity, its environment, and internal controls, as well as identifying key areas where risks may exist.

8. BASIC PRINCIPLES GOVERNING THE AUDIT 7.Materiality Auditors assess whether any misstatements or omissions in the financial statements are material. Materiality refers to the significance of an item or error in relation to the overall financial statements—small errors that don't affect the overall financial position may not require adjustment.

9. BASIC PRINCIPLES GOVERNING THE AUDIT 8.Professional Judgment Auditors must use their professional judgment to make decisions on various aspects of the audit, including assessing risks, determining materiality, evaluating the sufficiency of evidence, and forming conclusions about the financial statements.

10. BASIC PRINCIPLES GOVERNING THE AUDIT 9. Documentation Auditors must document the audit process, including evidence collected, procedures performed, and conclusions reached. This documentation is necessary for both legal and professional reasons and ensures transparency and accountability in the audit process.

11. BASIC PRINCIPLES GOVERNING THE AUDIT 10. Reporting The auditor must provide an opinion on whether the financial statements present a true and fair view, in accordance with the applicable financial reporting framework (e.g., IFRS, GAAP). The audit report is the formal communication that expresses this opinion, along with any findings or recommendations.