Audit Engagements

In most developed countries, publicly listed companies and large companies are required by law to produce annual financial statements and have them audited by an independent, external auditor.

Other organisations (e.g. small private companies, partnerships, etc.) may choose to be audited even if there is no legal requirement.

The objective of an audit

The objective of an external audit engagement is to enable the auditor to express an opinion on whether the financial statements

• give a true and fair view (or present fairly in all material respects), and
• are prepared, in all material respects, in accordance with an applicable financial reporting framework.

The financial reporting framework to be applied will vary from country to country.

General principles

The auditor should follow certain general principles in the conduct of an external audit.

• Compliance with applicable ethical principles, i.e. the IFAC Code of Ethics for Professional Accountants and the ethical pronouncements of the auditor's professional body, e.g. the ACCA's Rules of Professional Conduct.
• Compliance with applicable auditing standards, i.e. the International Auditing and Assurance Standards Board's (IAASB's) International Standards on Auditing (ISAs).
• Planning and performing the audit with an attitude of professional scepticism that recognises that the financial statements being audited may be materially misstated.
• Relevant national legal frameworks.

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