NATURE Of AUDITING
NATURE of AUDITING, ATTESTATION AND ASSURANCE SERVICES
Let us understand a few terminologies before going further in the discussion of the details of auditing and assurance since these terms will be used often throughout the text. Auditing, attestation and assurance services are often used interchangeably because they encompass the same decision-process: defining the decision problem, defining the alternative choices, identifying and obtaining information relevant to the decision problem, evaluating the alternatives in light of available information, and selecting the best option. AUDITING is a systematic process of objectively obtaining and evaluating evidence regarding selected assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users. This broad definition identifies key elements:
Systematic process — audits are structured activities;
Objectivity — freedom from bias;
Obtaining and evaluating evidence — allows the auditor to determine the support for assertions or representations;
Assertions about economic actions and events — describes the subject matter of an audit; representations by management comprising internal control assertions and financial statement assertions
Degree of correspondence … established criteria — the purpose of the audit is to determine conformity with some specified criteria; degree of correspondence refers to the closeness with which the assertions can be identified with established criteria such as applicable financial reporting framework (Philippine Accounting Standards/Philippine Financial Reporting Standards), Philippine Standards on Auditing, specific rules and regulations established by a legislative body or those set by management
Communicating results — the results must be communicated to interested parties through a written report which could either enhance or weaken the credibility of the
Let us understand a few terminologies before going further in the discussion of the details of auditing and assurance since these terms will be used often throughout the text. Auditing, attestation and assurance services are often used interchangeably because they encompass the same decision-process: defining the decision problem, defining the alternative choices, identifying and obtaining information relevant to the decision problem, evaluating the alternatives in light of available information, and selecting the best option. AUDITING is a systematic process of objectively obtaining and evaluating evidence regarding selected assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users. This broad definition identifies key elements:
Systematic process — audits are structured activities;
Objectivity — freedom from bias;
Obtaining and evaluating evidence — allows the auditor to determine the support for assertions or representations;
Assertions about economic actions and events — describes the subject matter of an audit; representations by management comprising internal control assertions and financial statement assertions
Degree of correspondence … established criteria — the purpose of the audit is to determine conformity with some specified criteria; degree of correspondence refers to the closeness with which the assertions can be identified with established criteria such as applicable financial reporting framework (Philippine Accounting Standards/Philippine Financial Reporting Standards), Philippine Standards on Auditing, specific rules and regulations established by a legislative body or those set by management
Communicating results — the results must be communicated to interested parties through a written report which could either enhance or weaken the credibility of the