OBJECTIVE OF CONDUCTING AN AUDIT OF FINANCIAL STATEMENTS
OBJECTIVE OF CONDUCTING AN AUDIT OF FINANCIAL STATEMENTSISA 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.
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