AUDIT ASSIGNMENT

INTRODUCTION Auditing is the examining of a set of accounts both financially and non-financially to ensure that the financial statement is being prepared in accordance with International Auditing Standard(IAS) and International Financial Reporting Standard(IFRS) issued by the International Accounting Standard Board(IASB). This scrutinizing of accounts form part of the audit profession and most importantly they should be allow to express an opinion, to bring about credibility and reliability in the information of the financial statement. It is then that the users of the account will have a clear picture on the performance of the business thereby, assessing the effectiveness of managers in achieving organizational goal. This scrutinizing of accounts form part of the audit profession and most importantly they should be allow to express an opinion, to bring about credibility and reliability in the information of the financial statement. It is then that the users of the account will have a clear picture on the performance of the business thereby, assessing the effectiveness of managers in achieving organizational goal. However, the auditors opinion must be supported by the IAS which is developed by the International Auditing and Assurance Standards Board (IAASB) under the aegis of International Federation of Accountants (IFAC). This will therefore, enhance quality and uniformity in the audit profession throughout the world and strengthen public opinion in Financial reporting. On the other hand, to some extent auditing will obviously contribute to improve performance and financial position of a business, provided the high quality international standard issued by the IASB is being applied in the preparation of the financial statement. International Federation of Accountants (IFAC) The mission of the International Federation of Accountants (IFAC) is to serve the public interest, strengthen the accountancy profession worldwide and contribute to the development of strong international economies by establishing and promoting adherence to high-quality professional standards, furthering the international convergence of such standards and speaking out on public interest issues where the professions expertise is most relevant.

AUDIT ASSIGNMENT

International Standards on Auditing (ISAs) International Standards on Auditing (ISAs) are professional standards that deal with the independent auditor's responsibilities when conducting an audit of financial statements. ISAs contain objectives and requirements together with application and other explanatory material. The auditor is required to have an understanding of the entire text of an ISA, including its application and other explanatory material, to understand its objectives and to apply its requirements properly.

IMPORTANCE OF AUDIT As ownership and control are separated in large companies, directors having the control could do anything. However directors have some responsibilities towards the company and shareholders which are the true owner of the company. Previously, the regulatory framework did not see the importance of regulating the board of directors. But with corporate failures like the ENRON scandal the regulatory body has given legal force to basic corporate principles. One of the main one is the introduction of audit committees in companies. These corporate governance principles is based on two important reports namely the TURNBULL reports and the Combined code. In recent years these principles has been consolidated by the Sarbanes Oxley ACT. The TURNBULL report is report on internal controls published in September 1999 by the institution of Chartered Accountants in England and Wales. The TURNBULL report is a guidance that gives assistance to directors of listed companies when implementing the internal control recommendation set out and help them to place an effective risk management and internal control system for the management of risk in order to achieve their business objectives.

AUDIT ASSIGNMENT

AUDITORS The job of the auditor is to view predefined reports based on audit event categories, detect security risks, create and evaluate alert scenarios, and create and manage detailed and summary reports of events across systems. The auditor can create custom audit reports and use the Data Warehouse service to analyze audit data for trends, intrusions, anomalies, and so on. There are two types of auditors namely internal and external. Internal Auditors Internal auditors are employees of the organization whose activities are being examined and evaluated during an independent audit. The primary purposes of internal auditing are to review and assess a company's policies, procedures, and records and to review and assess a company's performance given its plans, policies, and procedures. Therefore, internal auditors review financial records and accounting systems, assess compliance with company policies, evaluate the efficiency of company operations, and assess the attainment of company goals. External Auditors In contrast, the independent auditor is not an employee of the organization being audited or an employee of the government. He or she performs an examination with the objective of issuing a report containing an opinion on a client's financial statements. The attest function of external auditing refers to the auditor's expression of an opinion on a company's financial statements. Generally, the criteria for judging an auditor's financial statements are generally accepted accounting principles. The typical independent audit leads to an attestation regarding the fairness and dependability of the statements. This is communicated to the officials of the audited entity in the form of a written report accompanying the statements.

AUDIT ASSIGNMENT

THE EFFECTS OF AUDITING Auditing have some benefits which include the following: Following Enron and similar scandals, there is a healthy awareness of the dangers of collusion and conflicts of interest in combining the roles of auditor and consultant. Problems identified in an audit could become the subject of consultancy work so that a virtuous circle could theoretically be developed. The analysis of audit data has become an important tool for detecting fraud and data misuse. Audit trails can contain extensive, detailed, and sensitive information about production systems. Auditing enables the detection of unauthorized actions, as well as the actions performed by authorized users. It reveals who did what, and what was affected. Even audit information that might seem harmless by itself can be used to infer other confidential information after some correlation. ISA 240 deals with the auditor's responsibilities relating to fraud in an audit of financial statements. Specifically, it expands on how ISA 315 and ISA 330 are to be applied in relation to risks of material misstatement due to fraud. The vital advantage of an audit is that it makes it easier to compare diverse companies as the auditors articulate their judgments about the equality of measures. Of a company is given a good judgment then it means that it is follow the law. It also assists in following positive values. An audit will remain the managers from frustrating to pamper in deceptive performs as it is a resources of responsibility. It confirm to dependability and honesty of the consequences. ISA 250 deals with the auditor's responsibility to consider laws and regulations in an audit of financial statements. The errors whether committed unknowingly or consciously are exposed by the process of audit and its attendance prevents their occurrence in the future. No one will try to commit an error or fraud as the accounts are subject to audit and hence they will have a fear of being detected. Auditing is very practical in attaining the sovereign opinion of the auditor about business condition. If the accounts are audited by a sovereign auditor, the report of the auditor will be true and fair in all respects according to ISA 200 which deals with the independent auditor's overall responsibilities when conducting an audit of financial statements in

AUDIT ASSIGNMENT

accordance with ISAs and ISA 540 deals with the auditor's responsibilities relating to accounting estimates, including fair value accounting estimates, and related disclosures in an audit of financial statements. It will be of tremendous importance for the management of the company. Internal audit can be beneficial to most organizations because, if planned properly, it provides management with a methodology to identify those risks that may prevent the organization from meeting its objectives. ISA 610 deals with the external auditor's responsibilities relating to the work of internal auditors when the external auditor has determined, in accordance with ISA 315, that the internal audit function is likely to be relevant to the audit. Internal audit can be a value-add activity but often times it is strictly a policing function, which is sadly an example when the cost of internal audit usually does not exceed its benefit. However, auditing also have some costs including the following: One disadvantage of an audit can be the expenses concerned because you have to pay the auditors and also guarantee that you preserve comprehensive records of all the interactions which engage a lot of expenses. Despite these high costs, errors and frauds are not detected on time. Auditing can fail to disclose the correct information of what's happening. Background entries may not be totally clear to audit staff and management may be vague on their clarifications. Whether or not these things happen, an auditor still has to give his report. A significant potential disadvantage of the private audit firms is the fact that an Auditor General may have more experience in auditing public sector organizations and may therefore have an audit approach that is more in line with the different objectives and values that govern these. The operations of the organizations continue to be more similar to those of national public.

AUDIT ASSIGNMENT

CONCLUSION Having studied the costs and benefits of auditing, it can be deduced that auditing plays a very important role. It helps to improve the performance and financial position of a business considerably despite all the costs involved. Therefore it is really helpful for all companies to do an audit on their financial statements.