Preface to Codification of Statements on Auditing Standards, Principles Underlying an Audit Conducted in Accordance with Generally Accepted Auditing Standards

Article excerpt

This preface contains the principles underlying an audit conducted in accordance with generally accepted auditing standards (the principles). These principles are not requirements and do not carry any authority.

The Auditing Standards Board has developed the principles to provide a framework that is helpful in understanding and explaining an audit. The principles are organized to provide a structure for the Codification of Statements on Auditing Standards. This structure addresses the purpose of an audit (purpose), personal responsibilities of the auditor (responsibilities), auditor actions in performing the audit (performance), and reporting (reporting).

Purpose of an Audit and Premise Upon Which an Audit is Conducted

1. The purpose of an audit is to provide financial statement users with an opinion by the auditor on whether the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework. An auditor's opinion enhances the degree of confidence that intended users can place in the financial statements.

2. An audit in accordance with generally accepted auditing standards is conducted on the premise that management and, where appropriate, those charged with governance, have responsibility

a. for the preparation and fair presentation of the financial statements in accordance with the applicable financial reporting framework; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; and

b. to provide the auditor with

i. all information, such as records, documentation, and other matters that are relevant to the preparation and fair presentation of the financial statements;

ii. any additional information that the auditor may request from management and, where appropriate, those charged with governance; and

iii. unrestricted access to those within the entity from whom the auditor determines it necessary to obtain audit evidence. …