Detailed Report: Auditing and Assurance Services, Financial Analysis

This report examines auditing and assurance services, defining the role of an auditor in providing an independent opinion on a company's financial structure. It explains the audit process, the importance of financial reporting, and the auditor's responsibility in ensuring fair representation of financial information. The report covers concepts such as reasonable assurance, professional skepticism, and the auditing procedures used to verify financial statements. It also explores the limitations of an audit and the importance of auditor independence. The report emphasizes the significance of auditing in providing stakeholders with confidence in financial statements, supporting informed decisions by investors and lenders. Key elements include understanding audit objectives, the auditor's responsibilities, and the application of auditing standards. The report also highlights the importance of professional skepticism in uncovering potential misstatements and ensuring audit quality.

Running head: AUDITING AND ASSURANCE SERVICES
Auditing and Assurance Services
Name of the student
Name of the University
Author Note

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Table of Contents
Answer to Question 1.................................................................................................................2
Introduction............................................................................................................................2
Understanding Audit..............................................................................................................3
Understanding Auditor...........................................................................................................3
Answer to Question 2.................................................................................................................4
Concept and how reasonable assurance is formed.................................................................4
Auditor is not able to give absolute assurance.......................................................................5
Answer to Question 3.................................................................................................................7
Concept of Professional Scepticism.......................................................................................7
References..................................................................................................................................8

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Answer to Question 1
Introduction
As per the case study the opinion of the audit or a work of an auditor was explained to Jason.
The auditor is a person who is appointed by the organization and who gives an independent
opinion about the company’s financial structure. The auditor checks whether the financial
standards and reporting of all the standards are given by the company. The auditor helps in
the getting a true fair and independent view of the financials of the company. It conforms that
the financial position, the cost sheet and the operation of the company are in conformity with
the various principles and standards of accounting.
Understanding Audit
An audit is the understanding of the examination of the all the financials of the company. The
report of the auditor is shown in the annual report and signed by the auditor. The financial
report includes the balance sheet, the cash flows and changes in the equity position and the
income statement and the profit and loss .The purpose and the reasons for doing audit is to
form a view whether the information presented in the report will reflect the financial position
of the organization or the company (Arens et al., 2016).
The auditor examines the financial report and what the auditor must follow and the auditing
standards set by the Government institute. Once the auditor completed the work they will
provide the report explaining the opinion drawn from the work.

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Understanding Auditor
Auditors are the person appointed to discuss the scope of the audit work with the
organization, the board and the directors may request for additional procedures to be
followed. Auditors maintain an independent form of work and thereby they form a judgement
which is independent, true and fair picture. Auditors will determine the auditing procedures
the task they will perform depending on the procedures that they will perform. The extent of
the audit procedures and the risks identified. The procedures are written as well as the oral
question which is asked by the auditor to the company, and the auditor examines financial
and accounting records (Arens, Elder & Beasley,2014).

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Answer to Question 2
Concept and how reasonable assurance is formed
The auditor engages himself to render the opinion on whether the company’s financial
statements are well and fairly represented in accordance with the materials and the financial
statements and reporting is done properly. The audit is something which help the public and
the stakeholders of the company to come to know about the true picture of the organization,
thereby the lenders and investors have the confidence in the financial statements of the
organization (Cohen, J. R. & Simnett, 2014).
Auditor is not able to give absolute assurance
In order to form an opinion, the auditor gather various inside information which is
appropriate and observes until gaining reasonable assurance. The auditor will then form
opinion as to the see whether the financial statements are free from any error or falsification
or material misstatement which causes fraud and thereby creating error free task.
The important auditing principles are as follows:
1. Inquiring about the management that will help in gaining an understanding of the
organization and its functions and financial reporting and the errors occurred
2. Evaluating the financials and the internal control system
3. Performing analytical process and the variance for account balances of the
transactions

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4. Confirming about accounts receivable with the accounts with the third party
At the end of audit, the auditor will give advice for improving financial reporting so as to
maximize the performance (Knechel et al.,2016).

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Answer to Question 3
Concept of Professional Scepticism
Professional Scepticism means a questioning mind which is an attitude of being alert so that
the possible misstatement due to error and fraud evidences given by the auditor. The auditor
is someone who is sceptical in recent times and the work of the auditor is to find error and
also provide the evidences by the auditor.
The auditor’s skill is set by:
a) The exercise for professional judgement and audit quality
b) Enhancing the effectiveness of audit procedure
c) Reducing the possibility of error
d) Selecting appropriate audit procedures (Louwers et al., 2015).
 Misinterpret audit results
 Overlooking unusual circumstances
e) Decisions on the company and auditing is done by the auditor
 Nature and timing of audit procedures
 Sufficient audit and evidence
 Evaluation of the judgement of the management
 Conclusions is drawn based on the audit evidence
The managers always try to give a deceptive picture and the financial information about
the company and thereby the figure might not be correct therefore the auditor gives a

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independent view of the organisation and therefore makes the review of the organisation
so as to depict a correct and true picture of the organization (William Jr et al., 2016).
References
Arens, A. A., Elder, R. J., Beasley, M. S., & Hogan, C. E. (2016). Auditing and assurance
services. Pearson.
Arens, A., Elder, R., & Beasley, M. (2014). Auditing and assurance services-An integrated
approach; includes coverage of international standards and global auditing issues, in addition
to coverage of. Boston: Aufl.
Cohen, J. R., & Simnett, R. (2014). CSR and assurance services: A research agenda.
Auditing: A Journal of Practice & Theory, 34(1), 59-74.
Knechel, W. R., & Salterio, S. E. (2016). Auditing: Assurance and risk. Taylor & Francis.
Louwers, T. J., Ramsay, R. J., Sinason, D. H., Strawser, J. R., & Thibodeau, J. C. (2015).
Auditing & assurance services. McGraw-Hill Education.
William Jr, M., Glover, S., & Prawitt, D. (2016). Auditing and assurance services: A
systematic approach. McGraw-Hill Education.

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