ABREMA is a normative model of assurance auditing originally published as a monograph and subsequently developed on the WWW for use as an aid in teaching and researching financial statement auditing. Although the pages in the ABREMA site do not refer to the auditing standards of any particular country, the model is generally consistent, unless otherwise noted, with International Standards on Auditing issued by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants. These International Standards on Auditing are referred to in the ABREMA pages with the prefix ISA.
As indicated above, ABREMA is prescriptive in nature. There are, however, references throughout the site to a number of more recent descriptive studies reported in the professional and academic literature. Not unexpectedly, many of these studies support the approach taken by ABREMA / ISAs, while others do not.
The auditor of information (such as financial or environmental information) that is the responsibility of one party (such as management) but is for use by other parties (such as shareholders, customers, suppliers, governments) requires technical competencies in three main disciplines:
The pages on the ABREMA site primarily deal with the last of the abovementioned disciplines. There are no pages dealing with either information systems or the accounting aspects of auditing. The ABREMA site is concerned with cognitive decision making by auditors[fn]. In particular, the pages deal with the manner in which auditors initially plan to gather the necessary evidence relating to the critical decisions made by them during the course of an audit, then how auditors gather and evaluate that evidence, and finally how auditors make the critical decisions based on the evaluation of that evidence.
ABREMA integrates the three descriptive concepts of the audit objective, information misstatements and audit stages, with the two theoretical concepts of cognitive decision making and audit risk.
Although some of these concepts are neither new nor particularly controversial, the manner in which these concepts are brought together into a single, integrated model (demonstrated in tabular form below) provides the basis for a structured, modular approach to the teaching of auditing as well as being a novel contribution to the conceptual framework discussion.
| AUDITOR ACTIVITIES | AUDIT STAGES | ||||
|---|---|---|---|---|---|
| Client acceptance/ retention | Audit planning | Control testing | Substantive testing | Opinion formulation | |
| Planning | Strategic planning | Tactical planning | Operational planning | Operational planning | Operational planning |
| Evidence gathering | Preliminary knowledge of business | Detailed knowledge of business | Effectiveness of controls | Substantiveness of underlying data | Consistency of final information with auditor's knowledge of business |
| Evidence evaluation | AR*1 ~ AR1 | DR*2 = AR*2 / IR2 x CR2 | CR2 ~ CR3 | AR*4 ~ AR4 | AR*5 ~ AR5 |
| Decision making | Accept/retain (or reject/ relinquish) | Audit approach | Continued reliance on controls | Conclusion on individual data items | Audit opinion |
Note that in the above table (and elsewhere in this site) subscripts are used to indicate the point of time at which the evaluation of audit risk and/or its components are evaluated; a tilde sign ( ~ ) between risk components is used to signify a comparison between the evaluation of those components; and an asterisk is used to distinguish between:
Although ABREMA is applicable to most types of information audits, the remaining pages on this site demonstrate how the model may be applied to a particular type of information audit — a financial statement audit — and in particular, the audit of the annual financial statements of an entity by an external auditor. Viewers, however, should be aware that the model has a number of limitations when applied to financial statement auditing.
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