The UK Financial Reporting Council has recently published some really useful guidance, as part of a campaign to support SME Auditors which explains What is an Audit?
Auditors themselves will find the guide helpful in explaining to existing and prospective clients what an audit is and what it is not.
The guide explains:
- What is an audit?
- What do we mean by ‘materiality’?
- What is the purpose of an audit?
- What value does an audit bring to the audited entity?
- What are the principles common to all audits?
For example, the section on materiality explains that materiality is central to the audit. A material misstatement is one that could reasonably be expected to influence the economic decisions of the intended users of the financial statements.
The auditor is not, therefore, attempting to identify all misstatements of any size that may be present in the financial statements, only those that are material.
It draws attention to the fact that a misstatement can be material by nature as well as by value. For example, a fraudulent misstatement may be deemed material even if it is below quantitative materiality.
This guide is well worth reading and passing on to your clients to help better explain the valuable service that auditors provide. See What is an Audit? for more details.
For audit cold file reviews and tailored training sessions explaining more about various topics like AML, Audit, FRS 102, please send a mail to john@jmcc.ie.
For more on engagement and representation letter templates and a variety of CPD webinars on money laundering and other accounting/audit related topics, please go to our website for:
- Our latest CPD Webinar on The Main Changes in Irish GAAP (recorded July 2024)
- Anti-Money Laundering Policies Controls and Procedures Manual (March 2022) — View the table of contents
- AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion you receive a CPD certificate for attendance in your inbox.
- Letters of engagement and similar templates—Please visit our website here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items bought together.
ISQM TOOLKIT, or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard. We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. Please contact John McCarthy FCA by email at john@jmcc.ie.
