Chapter 6 – Audit Responsibilities and Objectives.pptVIP

Audit Responsibilitiesand Objectives Chapter 6 Learning Objective 1 Objective of Conducting an Audit of Financial Statements Steps to Develop Audit Objectives Steps to Develop Audit Objectives Learning Objective 2 Management’s Responsibilities Management’s Responsibilities Learning Objective 3 Auditor’s Responsibilities Auditor’s Responsibilities for Discovering Illegal Acts Auditor’s Responsibilities for Discovering Illegal Acts Learning Objective 4 Financial Statements Cycles Transaction Flow Example Transaction Flow Example Relationships Among Transaction Cycles Learning Objective 5 Balance and Transactions Affecting Balances Example Learning Objective 6 Management Assertions Management Assertions forEach Category of Assertions Learning Objective 7 General Transactions-related Audit Objectives General Transactions-related Audit Objectives Learning Objective 8 General Balance-relatedAudit Objectives General Balance-relatedAudit Objectives General Balance-relatedAudit Objectives Learning Objective 9 Learning Objective 10 How Audit Objectives Are Met Four Phases of a Financial Statement Audit End of Chapter 6 Realizable value Assets are included at estimated realizable value Rights and obligations Assets must be owned Management Assertions About Account Balances General Balance- related Audit Objectives Specific Balance-related Audit Objectives Applied to Inventory Existence Existence All recorded inventory exists at the balance sheet date Completeness Completeness All existing inventory has been counted and included in the inventory summary Hillsburg Hardware Co. (Applied to Inventory) Management Assertions About Account Balances General Balance- related Audit Objectives Valuation and allocation Accuracy Inventory quantities on the client’s perpetual records agree with items physically on hand Prices used to value inventories are materially correct Extensions of price times quantity are correct and details are correctly added Specific B