Mid-Term Exam - IA - Ashilla Nadiya Amany - 2002030013

Download as docx, pdf, or txt
Download as docx, pdf, or txt
You are on page 1of 7

Name : Ashilla Nadiya Amany

Student ID Number : 2002030013


Study Program : Accounting S1

“QUIZ 7th Meeting”

1. Explain the relationship between Audit services, Attestation services, Assurance


services. Give an example of each
- Audit or inspection services in a broad sense mean evaluation of an organization, system,
process, or product. The audit is carried out by a competent, objective and impartial party
called the auditor. Its purpose is to verify that the subject matter of the audit has been
completed or is proceeding in accordance with agreed and accepted standards, regulations
and practices.
Example: Audit of historical financial statements
- Attestation is one type of service provided by the Public Accounting Firm. Attestation
services are provided to provide a statement or consideration as an independent and
competent party regarding a statement (assertion) of a business unit in accordance with
the established criteria.
Examples: Audits of historical financial statements, reviews of historical financial
statements, and other attestation services.
- Assurance services are independent professional services or services that can improve the
quality of information for decision makers. This service can be provided by public
accounting firms or professionals from various other fields.
Example: Quality assurance consumer institutions

2. Question 5
a. Explain the similarities and differences between Financial Statement Audit, Compliance
Audit and Operational Audit.
 The equation is general audit
 The difference is related to efficiency
i. Financial Statement Audit
Conducted to determine whether the financial statements as a whole are
quantitative information to be examined – stated in accordance with certain
predetermined criteria. The criteria used are SAK. The underlying assumption is that
these reports will be used by various parties for various purposes. Therefore, it would
be more efficient to use one auditor to conduct an audit and draw conclusions that can
be relied on by various parties rather than requiring each user of the report to conduct
an audit individually.
ii. Compliance Audit
The purpose is to determine whether the audited party has followed certain
procedures or rules set by the competent authorities. A compliance audit for a
company can be in the form of determining whether employees in the accounting field
have followed the procedures set by the company controller.
iii. Operational Audit
A review of each part of the procedures and methods applied by an entity with
the aim of evaluating its efficiency and effectiveness. The end result is a
recommendation to management for operational improvement.

b. Name the types of auditors and explain the duties of each type of auditor
 Government Auditors are auditors tasked with conducting audits of state finances in
government agencies. In Indonesia, this audit is carried out by the BPK which was
formed as a manifestation of Article 23 paragraph 5 of the 1945 Constitution. Its main
task is to examine the state financial statements whose provisions have been stipulated
by law and the results of the examination are notified to the DPR.
 Internal auditors are auditors who work for an entity (company) with the status of an
employee in the company. His audit duties are primarily intended to assist the
management of the entity where he works. The responsibilities of internal auditors in
various companies vary greatly depending on the needs of the company concerned.
The internal auditor cannot be independent of the company because he is an employee
of the company. Internal auditors are obliged to provide information to management
that is useful for making decisions related to the effectiveness of the company.
 Independent Auditor is an auditor who audits financial statements issued by another
entity or company or organization. This audit is carried out on public companies
(companies that sell their shares to the public through the capital market), large
companies, and also on small companies, as well as organizations that do not aim for
profit.
 Auditor Ekternal usually needs to have a Certified Public Accountant (CPA) license
to be hired in a public accounting firm (usually certified by a government body) as an
external auditor. An external auditor’s job is to form an opinion on whether the books
of accounts have been maintained properly and whether the annual financial
statements portray a true and fair view of the entity’s financial position. The external
auditor is an independent body with no connections to its clients. They are hired by
the shareholders of the company rather than the management. An external auditor’s
opinion is impartial and solely for the users of financial statements on whether the
company is true to its shareholders or not.

3. Question 7
List six characteristics that determine the reliability (reliability) of evidence. For each of
these characteristics provide examples of the types of evidence that are likely to be
reliable.
a) Independence of evidence maker, examples of reliable types of evidence:
information obtained from banks, legal counsel, or customers.
b) The effectiveness of the client's internal control, for example: if the internal control
over sales and invoicing at the client's company is running effectively, then the
evidence is more reliable than sales invoices and shipping documents.
c) Auditor's direct knowledge, for example: the auditor calculates the gross profit for
this year and compares it with last year's gross profit.
d) Qualifications of the individual providing information, eg an examination of the gem
stock by an auditor trained to distinguish between genuine gems and glass would be
reliable evidence.
e) The level of objectivity, for example: confirmation of the balance of receivables
received from the debtor, the results of the physical count of cash and securities
carried out by the auditor.
f) Timeliness, for example: the results of the physical calculation of securities carried
out by the auditor on the balance sheet date

4. No. 1
a. What is the significance of the Basic Principles of Ethics in the IAPI Code of
Professional Ethics? → For each practitioner and provide a conceptual framework for the
application of these principles
b. Mention the main contents of the five basic ethical principles in the IAPI Code of
Professional Ethics!
- Threats to practitioner compliance with basic principles of professional ethics
- This code of ethics helps to identify, evaluate, and respond to threats to compliance
with the basic principles of professional ethics
- Each practitioner must evaluate any threats to compliance
- Every practitioner must pay attention to qualitative factors
- Practitioners may violate a provision in this code of conduct unintentionally

5. No. 3
Explain what is meant by Auditing Standards. Who makes and sets the Audit Standards
in Indonesia. Also explain the relationship between ISA and SPAP.

6. Question 6
a. Describe management's responsibilities and the auditor's responsibilities for the audited
financial statements.
 Management Responsibilities
Management has responsibility for financial reports and internal control. In
The Sarbanes-Oxley Act that responsibility is further tightened. One of them is the
obligation for CEOs and CFOs of public companies to provide statements about their
responsibilities for these financial statements, both for periodic reports and annual
reports sent to the SEC (Bapepam in Indonesia).
 Auditor Responsibilities
1) Materiality → The auditor's responsibility is only for material misstatements.
2) Reasonable assurance → This is a high degree of certainty but not absolute.
3) Errors versus fraud → An error is a misstatement due to an error, while fraud is
a misstatement due to fraud.
4) Professional skepticism → An attitude that is always curious and provides a
critical assessment of the evidence. The concept is that the auditor should not
assume that management is dishonest but that the possibility that management is
dishonest should still be taken into account.

b. What is the auditor's responsibility if a client has identified or suspected non-compliance


with laws or regulations…?
Audit Procedures When Noncompliance Is Identified or Suspected
If the auditor becomes aware of information concerning an instance of
noncompliance or suspected noncompliance with laws and regulations, the auditor
should obtain an understanding of the nature and circumstances of the act. Additional
information should be obtained to evaluate the possible effects on the financial
statements.
The auditor should discuss the matter with management at a level above those
involved with the suspected noncompliance and, when appropriate, those charged
with governance. If management or those charged with governance are unable to
provide sufficient information that supports that the entity is in compliance with the
laws and regulations, and the auditor believes the effect of the noncompliance may be
material to the financial statements, the auditor should consider the need to obtain
legal advice. The auditor should also evaluate the effects of the noncompliance on
other aspects of the audit, including the auditor’s risk assessment and the reliability of
other representations from management.
If the noncompliance has a material effect and has not been adequately
reflected in the financial statements, the auditor should express a qualified or adverse
opinion on the financial statements. If the auditor is precluded by management or
those charged with governance from obtaining sufficient appropriate evidence to
evaluate whether noncompliance that may be material to the financial statements has
occurred or is likely to have occurred, the auditor should express a qualified opinion
or disclaim an opinion on the financial statements on the basis of the scope limitation.

7. Question 8
a. What is client business risk and explain some sources of client business risk → Business
risk is the uncertainty that a company faces and can cause business losses or failures.
Uncertainty makes it difficult for companies to achieve targets. Some sources of client's
business risk are economic downturn, new technology that interferes with the client's
competitive advantage
b. What is the main purpose of the auditor conducting an evaluation of the client's business
risk → The client's business risk is the risk of the client's failure to achieve its goals,
several sources of the client's business risk are the economic downturn, new technologies
that interfere with the client's competitive advantage
c. Why auditors need to understand the client's line of business.
An in-depth understanding of the client's business and line of business as well as
the operations of the client company is very important to carry out an adequate audit. ISA
315.11 states that an understanding of the entity and its environment includes:
a) Industry, regulatory and other external factors including the applicable financial
reporting framework
b) The nature of the entity, including (i) its operations (ii) its ownership structure and
governance (iii) the types of investments the entity makes and plans to make,
including investments in special purpose entities and (iv) the way the entity is
structured and how the entity financed to enable the auditor to understand the classes
of transactions, account balances, and disclosures to be expected in the financial
statements.
c) Selection and application of accounting policies by the entity, including the reasons
for the changes. The auditor shall evaluate whether the entity's accounting policies
are appropriate for its business and consistent with the applicable financial reporting
framework and accounting policies used in the relevant industry.
d) The entity's objectives and strategies, and related business risks that may give rise to
risks of material misstatement
e) Measurement and review of the entity's financial performance

8. No. 2
Indicate the sentence in the OPINION paragraph of an auditor's report with the following
types of opinion:
a. Fair without exception
b. Fair with exceptions
c. Unreasonable
d. Don't give an opinion

a. Unqualified Opinion
The financial statements will receive an unqualified opinion if they meet the following
conditions:
- Complete financial reports
- Complete required audit evidence
- The three general standards have been fully followed in employment engagements
- Financial statements are presented in accordance with applicable and consistent accounting
principles
- There is no significant uncertainty regarding future developments
b. Qualified Opinion
The auditor must express a qualified opinion when:
- The auditor, after obtaining sufficient appropriate evidence, concludes that misstatements,
individually or in the aggregate, are material but not pervasive to the financial statements, or
- The auditor did not obtain sufficient appropriate evidence on which to base the audit
opinion, but the auditor concludes that the effect of undetected misstatements that may arise
on the financial statements, if any, could be material but not pervasive.
c. Adverse Opinion
The audit must express an adverse opinion when the auditor after conducting the examination
obtains sufficient and appropriate evidence and then concludes that there are misstatements,
both individually and in aggregate, that are material and pervasive to the financial statements.
Pervasive itself is defined as an error that will have an impact everywhere or deep.
d. Disclaimer of Opinion
Disclaimer of opinion is given by the auditor when the auditor does not obtain sufficient
appropriate evidence to base the audit opinion, and the auditor does not conclude that the
effects of undetected material misstatements that may arise on the financial statements, if
any, could be material and pervasive.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy