审计英语讲解.doc

审计英语讲解
Auditing
1. Assurance engagements and external audit
◇Materiality, true and fair presentation, reasonable assurance
Materiality is the magnitude of an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced by the omission or misstatement. An auditor must consider materiality both in (1) planning the audit and designing audit procedures and (2) evaluating audit results.
◇Appointment, removal and resignation of auditors
◇Types of opinion: standard unqualified opinion, Unqualified with additional explanatory language, qualified opinion, adverse opinion, disclaimer of opinion
◇Professional ethics: independence, objectivity, integrity, professional competence, due care, confidentiality, professional behavior
◇Engagement letter
2. Planning and risk assessment
◇General principles
○Plan and perform audits with an attitude of professional skepticism
○Audit risks = inherent risk × control risk × detection risk
(1) Inherent risk refers to the likelihood of material misstatement of an assertion, assuming no related internal control. This risk differs by account and assertion.
(2) Control risk is the likelihood that a material misstatement will not be prevented or detected on a timely basis by internal control. This risk is assessed using the results of tests of control.
(3) Detection risk is the likelihood that an auditor’s procedures lead to an improper conclusion that no material misstatement exists in an assertion when in fact such a misstatement does exist. The auditor’s substantive tests are primarily relied upon to restrict detection risk.
○Risk-based approach
◇Understanding the entity and knowledge of the business
The CPA should obtain a level of knowledge of the client’s business that will enable effective planning and performance of the audit in accordance with generally accepted auditing standards. This knowledge helps the auditor in
(1) Identifying areas that may need special consideration
(2) Assessing conditions under which accounting data are produced, processed, reviewed and accumulated

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