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AUDIT INTRODUCTION
Alif Fahmi Fatahuddin
Audit Definition

Audit is
Examination and verification of a company’s
financial records.
To ensure that financial information is represented
fairly and accurately.
Ensuring that financial statements are prepared
following the relevant accounting standards.

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Audit Advantage

Guarantees to the
investors
Auditing ensures investors that a firm’s
financial record is fair and accurate,
satisfies the investors about production
efficiency, and showing profitability of a
firm.

Discover errors and

frauds
Auditing helps in reducing the amount of
mistakes and frauds. So, the
management team can take
appropriate action quickly.

Increase the credibility

of financial statement
With audit opinion on a firm’s financial
statement, increases the credibility of a
firm. Investors and shareholders can
trust the accounts.

02
Audit & Accounting
What are the differences
Auditing is the process of examining books of
accounts and reporting on the financial
statements

Accounting is the process of recording,

classifying, summarizing, and interpreting all the
financial transaction

Audit objectives are to examine the correctness of

the accounts and financial statements and certify
whether the company exhibits a true and fair

Accounting objectives are to find out profit or loss

by a company and to show financial position of
company particular period

03
Types of Audit
Internal Audit
Performed by the employees
within a company. The audits
are not distributed outside the
company because they are
prepared for the use of
management and other internal
stakeholders.

External Audit
Performed by external
organizations and third parties.
External audits provide an
unbiased opinion that internal
auditors might not be able to
give and utilize to determine any
material misstatements in a
company’s financial statements.

Government
Audit
Performed to ensure that
financial statements have been
prepared accurately to not
misrepresent the amount of
taxable income of a company.

04
Example
Internal Audit

Source : GOTO Internal Audit, 31 March 2024

05
Example
External Audit

Source : GOTO Audit Report, 31 December 2024

06
Example
Government Audit

Source : Laporan Keuangan Pemerintah

Indonesia, 31 December 2023

07
Audit Process

01 Define audit objectives

02 Audit announcement

03 Audit data request

04 Audit entrance meeting

05 Fieldwork

06 Reviewing and inquiry

07 Audit exit meeting

08 Audit report

09 Post audit : Inquiry if there is any findings

08
Audit Procedure
Audit procedure are the techniques, processes, and
methods that auditors use to obtain reliable audit evidence,
which enables them to gain a judgment about an
organization's financial status.

Audit procedures are conducted to help determine whether

or not a company's financial statement is credible and
factual.

09
Audit Procedure
Here are 9 audit procedures

01 02 03

Inspection Observation Confirmation

Check and verify Observe all Investigate and
the documents in activities in the seek information
detail company to obtain external
confirmation

04 05 06

Enquiry Tracing Accounting

Request Tracing the Calculate
information and documents, from physical
statements from the initial process evidences
internal and to completion collected
external parties

07 08 09

Scanning Reforming Audit

Reviewing the Repeating the Reporting
results of data calculation Result
calculations and process and
supporting reconciliation
documents from the client's
side

10
Assertions

Assertions are representations by management, either explicitly or

otherwise, contained in the financial statements, which are used by
auditors to consider the various types of potential misstatements that may
occur.

Assertions are claims that establish whether or not financial statements are
true and fairly represented in the process of auditing.

Here are the assertions in audit

Existence : The assets, equity balances, and
liabilities exist at the period ending time

Completeness : The assets, equity balances, and

liabilities that are completed and supposed to be
recorded, recognized in the financial statements

Valuation : The assets, equity balances, and

liabilities have been valued appropriately

Rights and Obligations : The entity has the right to

benefit from recognized assets on the financial
statements and liabilities represent the actual
obligations of the entity
Presentation and Disclosure : The information and
disclosures are included in a company's
statements and all the information is fair and easy
to understand

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Example Of Assertion

Account Receivable Assertions

Revenue Assertions

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Materiality
Materiality is material omissions or misstatements of
items are material if they could, individually or
collectively, influence the economic decisions that users
make based on the financial statements.

Materiality depends on the size and nature of the

omission or misstatement judged in the surrounding
circumstances. The size or nature of the item, or a
combination of both, could be the determining factor.

Omission or misstatement which could influence the

decision of the users of financial statements is said to
be material.

13
Types of Materiality

Overall Materiality
The highest amount of information that if omitted,
misstated or not disclosed, then that information has
the potential to affect the economic decisions of users
of the financial report or the discharge of
accountability by management

Performance Materiality
The amount set at less than materiality for the
financial statements as a whole to reduce to an
appropriately low level the probability that the
aggregate of uncorrected and undetected
misstatements exceeds materiality

Unadjusted Error
If there is a misstatement in the financial statements,
but it is unlikely to affect users' decisions, the
misstatement is considered immaterial

14
Audit Sampling
Audit sampling is the application of audit procedures to less than 100
% of items in a population so that all individual items ("sampling
units") in the population should have a chance of selection.

To be able to form conclusions about certain defined characteristics

of the population without testing the whole population, the sample
drawn should be representative of the population and free from bias.

Source : pwc Internal Audit Testing and

Sampling Techniques - May 2014

15
Internal Control
Internal controls are accounting and auditing processes
used in a company's finance department that ensure
the integrity of financial reporting and regulatory
compliance.

Internal controls help companies to comply with laws

and regulations and prevent fraud. Also, they help
improve operational efficiency by ensuring that
budgets are adhered to, policies are followed, capital
shortages are identified, and accurate reports are
generated for leadership.

16
Audit Relation with
Internal Control

Internal control in audit refers to the

policies, procedures, and systems that
an organization has in place to ensure
that its operations are conducted in a
way that aligns with its objectives,
policies, and procedures

The auditor is responsible for assessing

the effectiveness of an organization's
internal control system to ensure that it
provides the necessary assurance about
the organization's operations, financial
reporting, and compliance with laws and
regulations

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My Final Project

18
Thank You...
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Alif Fahmi Fatahuddin
References

https://chetanmalikclasses.com/basic-
concepts-of-auditing/?authuser=0

https://corporatefinanceinstitute.com/re
sources/accounting/what-is-audit-
sampling/

https://www.equiperp.com/blog/menge
nal-9-prosedur-audit-dan-pentingnya-
bagi-perusahaan-anda/?authuser=0

https://intone.com/understanding-the-
importance-of-internal-control-in-
audit/

https://www.investopedia.com/terms/i/i
nternalcontrols.asp#toc-importance-
of-internal-controls

https://studylib.net/doc/8683777/