1. Audit Objectives
GROUP
MEMBERS :
 NOOR AMANINA ZAKARIA
 RATNA DEWI A/P PALANIAPPAN
 MOO ZIOW CHENG
 YONG YUE LING
 YEO SHU CHIN
 KANIMOLI A/P SEGARAN
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6-1

2. Objective of Conducting an
Audit of Financial Statements
The PRIMARY objective of the audit
is to express an opinion on the
financial statements.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6-2

3. Objectives of an Audit
of Financial Statements
1 Present Fairly
2 In all Material Respects
Financial Position, Results of
3 Operations, & Cash Flows
4 In Conformity with GAAP
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6-3

4. Transaction-Related
Audit Objectives
Recorded
Existence
transactions exist.
Existing transactions
Completeness
are recorded.
Recorded transactions
Accuracy are stated at the
correct amount.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6-4

5. Transaction-Related
Audit Objectives
Transactions are
Classification
properly classified.
Transactions are recorded
Timing
on the correct dates.
Transactions are included
Posting and
in the master files and
summarization
are correctly summarized.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6-5

6. General Balance-Related
Audit Objectives
Amounts
Existence
included exist.
Existing amounts
Completeness
are included.
Amounts included
Accuracy are stated at the
correct amounts.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6-6

7. General Balance-Related
Audit Objectives
Amounts are
Classification
properly classified.
Transactions are recorded
Cutoff
in the proper period.
Account balances agree
Detail tie-in with master file amounts,
and with the general ledger.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6-7

8. General Balance-Related
Audit Objectives
Realizable Assets are included at
value estimated realizable value.
Rights and
Assets must be owned.
obligations
Presentation Account balances and
and disclosures are presented
disclosure in financial statements.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6-8

9. Four Phases of an Audit
Perform analytical
Plan and design procedures and
Phase I Phase III
an audit approach. tests of details
of balances.
Perform tests of
Complete the
controls and
Phase II Phase IV audit and issue
substantive tests
an audit report.
of transactions.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6-9

10. SECONDARY OBJECTIVE
The SECONDARY objective of the audit
is to report the financial condition
of the business.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6 - 10

11. ERRORS & FRAUDS
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12. Detection and prevention
of Errors
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13. Detection and prevention of
Errors
ERRORS OF PRINCIPLE:
While recording a transaction, the fundamental
principles of accounting is not properly observed, these
types of errors could occur. Over valuation of closing
stock or incorrect allocation of expenditure or receipt
between capital and revenue are some of the examples of
such errors. Such errors will not affect the trial balance
but will affect the Profit and Loss account. It may occur
due to lack of knowledge of sound principles of
accounting or can be committed deliberately to falsify
the accounts. To detect such errors, the auditor has to do
a careful examination of the books of account.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6 - 13

14. DETECTION &
PREVENTION OF FRAUDS
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15. THANK YOU
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 6 - 15