1. Fundamentals of Financial Auditing

Audit Principles

• Independence: Essential for credibility, ensuring auditors' decisions are based solely on objective evidence.
• Objectivity: Involves basing conclusions on factual evidence, not personal beliefs or influences.
• Evidence Gathering: Collecting sufficient, reliable, and relevant evidence to form a solid audit opinion.

Types of Audits

• External Audits: Conducted by independent parties, these focus on financial statements and compliance.
• Internal Audits: In-house audits for improving internal processes and controls.
• Forensic Audits: Investigative audits are used to uncover fraud or legal violations.

Audit Process Overview

• Planning: Identifying the audit scope and objectives and assessing risks.
• Execution: Gathering and analyzing evidence; evaluating internal controls.
• Reporting: Presenting findings, conclusions, and recommendations.

2. Risk Assessment in Auditing

Identifying Risks

• Financial Risks: Such as credit risk, liquidity risk, and market risk.
• Operational Risks: Including system failures, management inefficiency, or process errors.

Risk-Based Auditing

• Prioritizing audit areas by risk level to allocate resources effectively.