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AUDITING I

What is audit ?
and
Who can become an auditor ?
Session 1

Learning Objectives

Understanding why a company need


to be audited.
Understanding what stakeholders
expect from auditors
Understanding the qualifications of
an auditor
Understanding the criteria used in an
audit process

What is auditing ?

Auditing as a systematic process of


objectively obtaining and evaluating
evidence regarding assertion about
economic actions and events to ascertain
the degree of correspondence between
those assertions and established criteria
and communicating the results to
interested users
(The report of The Committee on
Basic Auditing Concepts of
the American Accounting Association
- Accounting Review Vol. 47)

Contents of
Definition of auditing

A systematic process of objectively


obtaining and evaluating
evidence regarding
assertion about
economic actions and events to
ascertain the degree of correspondence
between those assertions and
established criteria and
communicating the results to interested
users

Business Interrelationship
and why do we need audit ?
Bankers

Investor

Others

Company
(management)

Suppliers

BAPPEPAM

Buyers
Government

What do they expect from auditor ?

Bankers
Investors
Bappepam
Buyers/customers
Suppliers
Government
Others

The Relationship among Users, Auditors


and Management of the company
Public
Investors

Bankers
Auditor

Others

Company
Company

Suppliers

Bappepam

Buyers
Government

Understanding about Auditor

Criteria used by auditor


Why do we need that criteria ?
Psychology of auditor
Auditor is a profession between the
need of a companys management and
of public
The Qualification of an auditor

The Qualification of an Auditor


SA Seksi 150 Standard Auditing stated:
a.1. Auditing harus dilaksanakan oleh
seorang atau lebih yang memiliki keahlian
dan pelatihan teknis yang
cukup
sebagai auditor.
a.2. Dalam semua hal yang berhubungan
dengan perikatan, independensi dalam
sikap mental harus dipertahankan oleh
auditor.
1.3. Dalam pelaksanaan audit dan
penyusunan laporannya, auditor wajib
menggunakan kemahiran profesionalnya
dengan cermat dan
seksama.

The Qualification of an Auditor


SA Seksi 150 Standard Auditing stated:
a.1. Audit should be done by a person or
persons who have been sufficently
trained
in audit technics to make him or them
become auditors.
a.2. with all respects related to angagement,
independent in mental attitude should be
maintained by auditors.
1.3. in implementing audit and preparing
audit report, auditor must prudently
implement his/her professional expertice.

Keahlian dan Pelatihan Teknis


(Expertice and Technical Training)

Auditor is respected as an expert


who
knows more,
understands more
experiences more
is more capable
Need a specialized education and training

Independent

Independent in appearance

Independent in performance/fact

The Important Elements of


an Independence.

Quality of personnel.
Freedom to act.
Interpersonal relationship.
Financial interest.
Profession solidarity.

Kemahiran professional
(Professional expertise)
Professional means acting
honestly
proportionally
impartially
based on his/her expertise and fact
consistently
persistently
in order to get the best result

So auditor is ?

An expert that people can account on


in doing audit on behalf of them, in
order to ensure whether the financial
statements being audited have been
presented in accordance with certain
criteria (generally accepted
accounting principles)

People can be accounted on

Adaptability
Understandability
Dedication
Independence
Trustworthiness
Objectiveness
Responsibility
(Qudrat Chalim)

Adaptability and Understandability


Auditors should be ready to deal with;
New working environment
New problem
New people to deal with
Working under pressure
Challenge in every step of audit
process

Dedication

An auditor should put all his/her afford,


(expertise knowledge, experience, and
time) in doing his job.
Nothing should be able to deviate
him/her from audit objectives

Independence

Impartial
Free to act and to express an opinion
Independence in performance/fact
Independence in appearance

Trustworthiness
Auditors should be a person who
has integrity,
is reliable,
is honest
is loyal
can be accounted on,

Objectiveness

Free of conflict of interest


Nothing to hide
No engineering
As it is

Responsibility

Due professional care


Based on evidence

CPA (Auditor) Engagement

Attestation Engagement
Audit on Financial Statements and other types of
audit
Examination on Prospective Financial Statements
Other Attestation Engagement

Non attestation Engagement

Management & Tax Consulting


Accounting and Bookkeeping
Compiling Financial Statements
Other Management Consulting

Types of Audit

Financial Audit
General Audit
Compliance Audit
Post Audit
Other Financial Audit

Management Audit
Operational Audit
Efficiency and Economy Audit
Performance or Effectiveness Audit
Other Management Audit

Audit Standards and Criteria

Audit Standards
GAAS or SPAP

Audit Criteria
General Audit GAAP or PSAK
Other Financial Audit

Rules/ Regulations and


Standards applied as the bases
on doing the activities

Management Audit
formulated by the auditor and

auditee.

References

SPAP SA 100 DAN SA 200


Messier, Glover, & Prawitt: Auditing &
Assurance Services: A Systematic
Approach Part 1
Boynton and Johnson: Modern
Auditing