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Unit 10: Government and Independent Financial Audit: Comparison

statements, the auditor should clearly indicate the character of the auditor’s work, if any, Notes
and the degree of responsibility the auditor is taking in the auditor’s report.
GAGAS establish reporting standards for financial audits in addition to the standards contained
in the AICPA standards. Auditors should comply with these additional standards when citing
GAGAS in their audit reports. The additional government auditing standards relate to:

1. reporting auditors’ compliance with GAGAS;
2. reporting on internal control and compliance with laws, regulations, and provisions of
contracts or grant agreements;

3. reporting deficiencies in internal control, fraud, illegal acts, violations of provisions of
contracts or grant agreements, and abuse;
4. communicating significant matters in the auditors’ report;

5. reporting on the restatement of previously-issued financial statements;
6. reporting views of responsible officials;
7. reporting confidential or sensitive information; and
8. distributing reports.

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Caution When providing an opinion or a disclaimer on financial statements, auditors
must also report on internal control over financial reporting and on compliance with
laws, regulations, and provisions of contracts or grant agreements.

Self Assessment

Fill in the blanks:
10. A …………………………. is the verification of the financial statements of a legal entity,
with a view to express an audit opinion.
11. …………………………… is not attainable because of the nature of audit evidence and the
characteristics of fraud.
12. GAGAS establish reporting standards for financial audits in addition to the standards
contained in the …………………. standards.

10.5 Independent Financial Audit

The independent financial audit is a complex of necessary and mutually connected procedures,
determined in the International Audit Standards, on the basis of which an independent opinion
is expressed with regard to the credibility in all aspects of materiality of the financial accounts,
prepared in compliance with the Bulgarian accounting legislation. The independent financial
audit is performed by statutory auditors, members of the Institute of Certified Expert –
Accountants. The statutory auditors and the Institute of Certified Expert Accountants are subject
to independent public oversight.
This Act regulates:
1. The objective and principles of the independent financial audit;
2. The professional standards of organization, documentation and execution, as well as
conclusions of the independent financial audit;

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