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    Q1: Difference Between Compliance and Financial Audit. Compliance Audit

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    Sharjeel Habib
    A compliance audit checks if an entity follows laws, regulations, and internal policies, while a financial audit evaluates financial reports and processes to check for material misstatements. Professional skepticism is a questioning mindset and critical assessment of evidence that increases chances of discovering errors or fraud. It is an ongoing debate in auditing, as auditors must apply skepticism throughout the audit process from client acceptance to issuing their report. Starting evidence collection and remaining alert for contradictions helps auditors move from understanding to challenging clients. Applying professional skepticism and judgment improves audit quality and benefits both firms and the jurisdictions they serve.

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    Q1: Difference Between Compliance and Financial Audit. Compliance Audit

    Uploaded by

    Sharjeel Habib
    100 views2 pages
    A compliance audit checks if an entity follows laws, regulations, and internal policies, while a financial audit evaluates financial reports and processes to check for material misstatements. Professional skepticism is a questioning mindset and critical assessment of evidence that increases chances of discovering errors or fraud. It is an ongoing debate in auditing, as auditors must apply skepticism throughout the audit process from client acceptance to issuing their report. Starting evidence collection and remaining alert for contradictions helps auditors move from understanding to challenging clients. Applying professional skepticism and judgment improves audit quality and benefits both firms and the jurisdictions they serve.

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    audit basic info

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    A compliance audit checks if an entity follows laws, regulations, and internal policies, while a financial audit evaluates financial reports and processes to check for material misstatements. Professional skepticism is a questioning mindset and critical assessment of evidence that increases chances of discovering errors or fraud. It is an ongoing debate in auditing, as auditors must apply skepticism throughout the audit process from client acceptance to issuing their report. Starting evidence collection and remaining alert for contradictions helps auditors move from understanding to challenging clients. Applying professional skepticism and judgment improves audit quality and benefits both firms and the jurisdictions they serve.

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    © All Rights Reserved
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    100 views2 pages

    Q1: Difference Between Compliance and Financial Audit. Compliance Audit

    Uploaded by

    Sharjeel Habib
    A compliance audit checks if an entity follows laws, regulations, and internal policies, while a financial audit evaluates financial reports and processes to check for material misstatements. Professional skepticism is a questioning mindset and critical assessment of evidence that increases chances of discovering errors or fraud. It is an ongoing debate in auditing, as auditors must apply skepticism throughout the audit process from client acceptance to issuing their report. Starting evidence collection and remaining alert for contradictions helps auditors move from understanding to challenging clients. Applying professional skepticism and judgment improves audit quality and benefits both firms and the jurisdictions they serve.

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    Q1: Difference between compliance and financial audit.

    Compliance Audit
    A compliance audit is the types of audit services that their performance is mainly focusing on
    whether the entity complying with local law, regulation, and related rule.
    A compliance audit also reviews whether an entity complying with internal rules, regulations,
    policies, decisions, and procedures.
    Their objective is to ensure that an organization has internal controls that adequately measure
    and manage the risks it faces

    Financial Audit
    A financial audit is an independent, objective evaluation of an organization's financial reports
    and financial reporting processes.

    The objective of a financial statement audit is to obtain reasonable assurance that the financial


    statements are free of material misstatement.

    2: Professional skepticism
    Professional skepticism is an attitude that entails a questioning mind and being alert to your
    surroundings. In our line of work, application of it translates to critical assessment of evidence
    that increases the chances of discovery of misstatement due to error or fraud.
    Professional skepticism is an on-going debate in our profession, with the main area of exchange
    of views being whether or not it is actually applied throughout the audit process.
    Following the Global Financial crisis, major corporate scandals and today’s complex and rapidly
    changing environment, the International Auditing and Assurance Standards Board (IAASB)
    highlighted that professional skepticism is more important than ever, and actual application of it
    is a necessity.
    Starting from the client acceptance stage all the way to the issue of the auditor’s report, auditors
    focus on the understanding of their clients, designing and executing their work specifically for
    the suggested client and industry it operates in, so that the audit risks involved are discovered,
    detailed and dealt with. At the audit execution stage, auditors collect the necessary audit
    evidence and remain alert for contradictions between all information in hand.
    Also, they consider if the information obtained brings into question the reliability of documents
    and the responses to inquiries to be used as audit evidence. Finally, at the completion stage,
    which is a critical point as auditors are forming their opinion, they critically evaluate whether the
    audit evidence and the financial statements as a whole are true and fair in all material
    respects.  This on-going application of professional skepticism allows that the auditors to move
    from an ‘understanding’ to a ‘challenging’ mind-set.
    The quality of services a company offers to their clients is directly linked with the application of
    professional skepticism and professional judgement.  The application of professional skepticism
    during an audit engagement is a vital ingredient for the quality of the outcome of the
    engagement.
    The aim is to drive the internal culture by significantly investing in its people, enhancement of
    the audit methodology and the integration of technology in the work environment.  To recruit,
    train and motivate selected professionals with a goal for each one to have an important role to
    play in the delivery of high-quality work.
    Finally, feedback from clients, stakeholders and the regulator, help to continue to improve the
    quality of the reporting. There is always room to build and develop on what is already in place
    with in an effort to have a consistent high standard of independence and transparency in the work
    which will not only benefit a professional Firm, but will also improve the general quality of the
    services offered in the jurisdiction.

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