An audit provides a high level of assurance on the financial statements of an entity. The purpose of an audit is to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. The auditor collects adequate and relevant audit evidence to substantiate their viewpoint.
Through the audit process, the auditor obtains a reasonable assurance level, which means that they obtain a high but not absolute level of confidence that the financial statements are free from material misstatement. This reasonable assurance base on the auditor’s assessment of the risks of material misstatement in the financial statements and the effectiveness of the entity’s internal controls.
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The auditor performs various procedures, including examining evidence, performing tests, and making inquiries, to obtain reasonable assurance. They assess the accounting policies, verify the accuracy and completeness of financial information, evaluate the presentation and disclosure of the financial statements and assess the overall fairness of the financial statements.
The audit opinion expresses the auditor’s professional judgment on the fairness of the financial statements and enhances the credibility and reliability of the information provided to users of the Statements, including those provided to shareholders, lenders, and various other stakeholders.
It’s important to note that while an audit provides a high level of assurance, it does not guarantee the detection of all instances of fraud or errors, especially those involving collusion or intentional misconduct. However, the audit process is design to provide reasonable assurance and increase the reliability of the financial statements.
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