Assurance Engagement | Type | Benefits | How to Choose? An assurance engagement is a type of professional service provided by auditors and accountants to increase the level of confidence and trust in a particular set of reporting. The purpose of an assurance engagement is to provide assurance to stakeholders, such as shareholders, regulators, and … Read more
Audit Engagement Letters: Key Components and Contents An audit engagement letter is a written agreement between the auditor and the client that sets out their expectations for the audit engagement. It is a formal document that is signed by both parties once the client has passed the auditor’s “know your client” (KYC) process. This letter … Read more
The Essential Role of Audit Assertions in the Audit Process Audit assertions are statements made by the management of a company about the completeness, accuracy, and reliability of its financial information. They are representations about the data and transactions reflected in the financial statements and play a crucial role in the financial audit process. Audit … Read more
Control Deficiency and Control Weakness Control deficiency and control weakness are terms used in the accounting profession to describe the lack of sufficient internal control systems and procedures. Internal control systems and procedures are designed to ensure the accuracy and reliability of the financial information that is used to make decisions, as well as to … Read more
What is Tracing in Auditing? In auditing, tracing is the process of following a transaction back to its source document to identify potential errors and verify its accuracy. This is done by locating an item in the general ledger and tracing it back to a subsidiary ledger if needed. Auditors use tracing on a sample … Read more
Five Components of Internal Control (COSO Framework) Internal control is a concept that encompasses various processes within an organization. It has been developed with the purpose of promoting effectiveness and efficiency of operations, reliability of financial reporting, and safeguarding of assets. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) developed a framework for … Read more
Familiarity Threat in Auditing Familiarity threat is a risk to an auditor’s independence and judgment. It occurs when the auditor has a long or close relationship with their client and can lead to biased decisions and affect the audit’s transparency. This risk arises from various aspects of the auditor-client relationship, such as the appointment method, … Read more
Reasonableness Test in Audit Reasonableness tests are commonly used in audits to assess the accuracy of financial statements and identify potential discrepancies. The procedure involves analyzing the data of the financial statements to create expectations. These expectations are based on historical information and compare the current information with what is expected. This process helps to … Read more
Self-Review Threat in Audit & Safeguard Self-review threat in auditing occurs when the same team that is responsible for the financial statements is also responsible for reviewing their own work, creating a direct conflict of interest. This situation can arise when audit firms provide additional services to their clients beyond the primary auditing services. These … Read more
What is Advocacy Threat? Impact to Auditor & Safeguard Advocacy threat to auditor refers to a situation where the auditor’s objectivity and impartiality are compromised because they become too involved or aligned with the interests of their client. This can occur when the auditor is providing non-audit services to their client or has a close … Read more