Faculty of Economic and Financial Sciences
Learning Unit 1
Responsibilities, functions and qualities of an
Auditor
,Department of Commercial
Accounting
LEVELS OF ASSURANCE (refer to p. 1/8)
Consider the following example:
Your rich uncle who has just passed away left money
for all his nephews and nieces. You share of the
money is R1m. You want to invest this money and you
have 2 organisations that look interesting to you.
Company 1: A large listed company. Every year they submit audited financial
statements to the JSE.
Company 2: A large sole proprietor, ZZ4, owned by a farmer that has made
a lot of money from tomato farming. The farmer’s financial statements
have never been audited.
2
, Department of Commercial
Accounting
LEVELS OF ASSURANCE (that the AUDITOR gives)
• Assurance can loosely be described as the
confidence you get from audited financial
statements as opposed to unaudited financial
statements.
• As indicated above, one of the important things
auditors do is to give assurance on whatever area
of audit they are involved. There are two levels of
assurance that an auditor can give:
• Reasonable assurance and limited assurance
3
Learning Unit 1
Responsibilities, functions and qualities of an
Auditor
,Department of Commercial
Accounting
LEVELS OF ASSURANCE (refer to p. 1/8)
Consider the following example:
Your rich uncle who has just passed away left money
for all his nephews and nieces. You share of the
money is R1m. You want to invest this money and you
have 2 organisations that look interesting to you.
Company 1: A large listed company. Every year they submit audited financial
statements to the JSE.
Company 2: A large sole proprietor, ZZ4, owned by a farmer that has made
a lot of money from tomato farming. The farmer’s financial statements
have never been audited.
2
, Department of Commercial
Accounting
LEVELS OF ASSURANCE (that the AUDITOR gives)
• Assurance can loosely be described as the
confidence you get from audited financial
statements as opposed to unaudited financial
statements.
• As indicated above, one of the important things
auditors do is to give assurance on whatever area
of audit they are involved. There are two levels of
assurance that an auditor can give:
• Reasonable assurance and limited assurance
3
