22522 Study Guide - Final Guide: Icq, Legal Liability, Trial Balance
Document Summary
The objective of an audit is to express an opinion about whether the financial report is prepared in all material respects in accordance with a financial reporting framework (asa 200) 3 demands for audits: agency theory the principal-agent problem, audit acts as a monitoring mechanism to align interests. Information hypothesis i(cid:373)p(cid:396)o(cid:448)i(cid:374)g (cid:395)ualit(cid:455) of (cid:373)g(cid:373)t(cid:859)s i(cid:374)fo - decision making: as well as shareholders. Insurance hypothesis: shifting some responsibility for the correctness of the accounts onto the auditor if any losses are expected from litigation. Insulate regulators from blame in a corporate failure. Regulation corporations act requires annual audit by: companies, registered schemes & disclosing entities (excludes small proprietary companies, commonwealth and state govt departments, statutory authorities, govt companies and business undertaking, municipalities, not-for-profit organisations. Act of auditors and liquidators can cancel/suspend auditors. Governance is the exercise of economic and administrative authority to manage an e(cid:374)tit(cid:455)(cid:859)s affai(cid:396). Independent auditor adds to credibility of the conduct of the agent.
