## Scope of Audit

### Part A — What Scope INCLUDES

#### (a) Coverage of All Relevant Aspects of the Entity

The audit must cover all aspects relevant to the FS, including:

The Financial Statements themselves
Internal Controls
Laws and Regulations applicable to the entity

#### (b) Reliability and Sufficiency of Financial Information

The auditor must be reasonably satisfied that information in Accounting Records and Other Records is:

Reliable, and
A sufficient basis for preparation of FS

To assess this, the auditor must:

Study and evaluate Accounting Records
Study and evaluate Internal Controls
Perform appropriate Audit Procedures (tests)

#### (c) Proper Disclosure of Financial Information

The auditor must ensure:

Financial information is properly disclosed
Transactions and events are accurately summarised
FS comply with Applicable FRF

> Management's Role in Scope: Preparation of FS is management's responsibility (involves significant judgments and selection of accounting policies). The auditor evaluates whether those policies are appropriate and consistently applied.

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### Part B — What Scope Does NOT Include

#	Exclusion	Reason
(a)	Preparation and presentation of FS	That is management's responsibility
(b)	Duties outside the competence of the auditor	Beyond professional expertise
(c)	Authentication of documents	Auditor is not a document authentication expert
(d)	Investigation	Audit ≠ Investigation (see separate topic)

Worked example

### Example 1

The auditor of ABC Ltd studies the internal controls over cash receipts (evaluating reliability) and tests a sample of 50 sales invoices against dispatch records (audit procedures). This satisfies the auditor that accounts receivable in the FS have a reliable and sufficient basis — within scope.

### Example 2

A shareholder asks the auditor to certify that every contract signed by the company is genuine. The auditor declines — authentication of documents is outside the scope and competence of an auditor.

⚠️ Common exam mistakes

Confusing auditor's responsibility with management's — the auditor does NOT prepare FS; management does. The auditor evaluates, not prepares.
Thinking investigation falls within the scope of audit — it is specifically excluded from the scope.
Forgetting that evaluating whether accounting policies are appropriate and consistently applied IS within scope, even though choosing those policies is management's job.

Reference:

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Scope of Audit — What It Includes and Excludes

Worked example

⚠️ Common exam mistakes