Audit Responsibilities and

Objectives
Group 1 :
Gracia Asri W (F1312050)
Arlini Permatasari P (F1314017)
Devi Nurayati (F1314031)
Dina Widiyanti (F1314032)
Garba Nuriya Q F (F1314041)
Hani Hanifah S (F1314043)
Lintang Ayu Kinanti (F1314056)
Mustika Ratna S (F1314063)
Nurul Ulfah H (F1314065)
Ririn Eka Riana (F1314074)
Rista Kusuma H (F1314075)
Ulfa Rahmawati (F1314086)

Objectives of Conducting an
Audit
The purpose of an audit is to provide
financial
statements users with an opinion by the
auditor on
whether the financial statements are
presented fairly,
in all material respects, in accordance with
the
applicable financial accounting framework.

Managements
Responsibilities
adopting sound accounting policies
maintaining adequate internal control
making fair representations

Auditors Responsibilities
The overall objectives of the auditor :

obtain reasonable assurance about

whether the financial statements as a
whole
are
free
from
material
misstatement, whether due to fraud or
error
To report on the financial statements, and
communicate as required by auditing
standards, in accordance with the auditors
findings.

 Auditors have three levels of responsibility

for finding and reporting illegal acts :
Evidence Accumulation When There Is No
Reason to Believe Indirect-Effect Illegal
Acts Exist
Evidence Accumulation and Other Actions
When There Is Reason to Believe Direct- or
Indirect-Effect Illegal Acts May Exist
Actions When the Auditor Knows of an
Illegal Act

Financial Statements Cycle

A common way to divide an audit is to keep
closely related types (or classes) of
transactions and account balances in the
same segment. This is called the cycle
approach. For example:
Sales and collection cycle
Acquisition and payment cycle
Payroll and personnel cycle
Inventory and warehousing cycle
Capital acquisition and repayment cycle

Setting Audit Objectives

For any given class of transactions, several audit objectives
must be met before the auditor can conclude that the
transactions are properly recorded. These are called
transaction-related audit objectives. For example, there
are specific sales transaction-related audit objectives and
specific sales returns and allowances transaction-related audit
objectives.
Similarly, several audit objectives must be met for each
account balance. These are called balance-related audit
objectives. For example, there are specific accounts
receivable balance-related audit objectives and specific
accounts payable balance-related audit objectives.
The third category of audit objectives relates to the
presentation and disclosure of information in the financial
statements.
These
are
called
presentation
and
disclosurerelated audit objectives. For example, there are
specific presentation and disclosure related audit objectives for
accounts receivable and notes payable.

Management Assertion
Management assertions are implied or
expressed representations by management about
classes of transactions and the related accounts
and disclosures in the financial statements.
International auditing standards and U.S. GAAS
classify assertions into three categories:

Assertions about classes of transactions and

events for the period under audit :
Occurance
Completeness
Accuracy
Classification
Cut off

Assertions about account balances at

period end:
Existence
Completeness
Valuation and Allocation
Rights and Obligations
Assertions about presentation and
disclosure
Occurance and Rights and Obligations
Completeness
Accuracy and Valuation
Classification and Understandability

Transaction-Related Audit
Objectives
The general transaction-related audit objectives :
OccuranceRecorded Transaction Exist
CompletenessExisting Transactions Are Recorded
AccuracyRecorded Transaction Are Stated At The
Correct Amounts
Posting and SummarizationRecorded Transactions
Are Properly Included in the Master Files and Are
Correctly Summarized
ClassificationTransactions Included in the Clients
Journals Are Properly Classified
TimingTransactions Are Recorded on the Correct
Dates

Balance-Related Audit
Objectives
The general balance-related audit objectives :
ExistenceAmounts Included Exist
CompletenessExisting Amounts Are Included
AccuracyAmounts Included Are Stated at the Correct
Amounts
ClassificationAmounts Included in the Clients Listing
are Properly Classified
CutoffTransactions Near the Balance Sheet Date Are
Recorded in the Proper Period
Detail Tie-InDetails in the Account Balance Agree
with Related Master File Amounts, Foot to the Total in
the Account Balance, and Agree with the Total in the
General Ledger
Realizable ValueAssets Are Included at the Amounts
Estimated to Be Realized
Rights and Obligations

Presentation and DisclosureRelated Audit Objectives

The presentation and disclosure-related audit
objectives are identical to the management
assertions
for
presentation
and
disclosure
discussed
previously.
The same concepts that apply to balance-related
audit
objectives apply equally to presentation and
disclosure
audit objectives.

How Audit Objectives Are Met

Planning and designing an audit approach
can be broken down into several parts. Three
key aspects, are:
Obtain An Understanding of the Entity and its
Environment
Understand Internal Control and Assess
Control Risk
Assess Risk of Material Misstatement