Auditing in context
• Objective of an audit is to express an opinion whether financial statements are
prepared in all material respects in accordance with framework. ( ISA 200)
• Audit is independent and impartial
• Importance of auditing
• Gives credibility to financial statements
• Shareholders can have confidence in directors
•Agency theory these independent auditors are key to monitor agents
performance for the principal.
• Expectation of auditors
• Expectation gap, (the difference between what public and financial statement
users believes auditors are responsible for and what auditors believe their
responsibilities are)
• Assure that company is a going concern (company can continue to operate)
• Assure that company is free from fraud
