Group Members:

BKAA2013

GROUP C (5)

Group Members:

Malathi A/P Tanggaraju

Nur Amira Adzudin

Erra Athirah Ismail

Zahidah Zakaria

Nurul Amni Sofian

Zheng Qian

OBJECTIVE OF CONDUCTING AN AUDIT OF FINANCIAL STATEMENTS

OBJECTIVE OF CONDUCTING AN AUDIT OF FINANCIAL STATEMENTS
ISA 200 states
The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accordance with an identified reporting framework.

INTRODUCTION

INTRODUCTION
In order to develop audit objectives, the auditing firm must:

Divide financial statements into cycles;

a. Sales and collections cycle

b. Acquisition and payment cycle

c. Payroll cycle

d. Inventory cycle

e. Capital acquisition and repayment cycle.

Auditors typically divide the financial statements into components or segments in order to make the audit more manageable, and auditors will be able to work more effectively. A component can be a financial statement account or a business (transaction cycle) process. This approach allows the auditor to gather evidence by examining the processing of related transactions through the accounting system from their origin to their ultimate disposition in the accounting journals and ledgers. Thus, the auditor can examine an accounting transaction from the time it is initiated by the entity until its final recording in the financial statement accounts.

Audit of Revenue Cycle

As part of a financial audit, the auditor must assess the inherent risk associated with the revenue cycle and perform tests to determine it is relatively free of error or fraud. The inherent risk for this cycle is related to the cutoff dates for particular types of sales and the pressures from management to misstate revenues. By conducting so-called substantive tests and tests of controls, the auditor can provide some assurance that the revenues of the company are recorded accurately.

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