Audit and Internal Review.docVIP

Audit and Internal Review Question 1 Give a comprehensive definition of auditing Auditing is expressing an expert and independent opinion as to the truth and fairness of the financial accounts. (Suzanne Burdis, 2007) Expert Conversant with accounting standards regulations Knowing auditing standards, companies act amendments Ethic code Specific company regulations ISA 240, Quality control Harmonization of country regulations (Suzanne Burdis, 2007) Independent Auditors must be be seen to be independent from the third party view and must no relationship with the entity, such as financial, personal and business conflicts of business. (Suzanne Burdis, 2007) Opinion The report is solely on auditor’s opinion. And it will express on base on Audit report ISA 700. (Suzanne Burdis, 2007) Truth Fairness True: Information is factual and conforms to reality, not false. Fairness: Information is free from discrimination and bias and in compliance with expected standards and rules. (Suzanne Burdis, 2007) But there is no guarantee of 100% accuracy, it is done on a test basis, it will offer a reasonable assurance that there is no material misstatement. (Suzanne Burdis, 2007) Financial accounts It refers to Balance sheet, statement of recognized gains losses, income statement, cash flow and notes disclosures e.g. director wages and expense. (Suzanne Burdis, 2007) Question 2 List and explain the statutory duties of company directors and also the statutory duties of auditors. Statutory duties of company directors The Companies Act 1985 stipulates that directors are to: Ensure that the company keeps proper accounting records. The accounting records must enable balance sheets and profit and loss accounts to be prepared that are in accordance with the Act (s.221) Prepare the profit and loss and balance sheet of the company for each financial year giving a true and fair view (s.226) State whether applicable Financial Reporting Standards have been complied with and, if not, go give part