Actuaries and the Auditing Process

So, an independent audit for non-managing owners provides a trusted second opinion on lakeside’s financial statements and, in turn, gives some, insight as to how well it is being run.

Elder, A. A., Beasley, M., & Elder, R. J. (2014). Auditing and assurance services (15th ed.). Upper Saddle River, NJ: Pearson.

The objectives of an auditor is to plan an audit so that it is conducted effectively. The objective of an audit is to provide assurance on the financial statements of the company. The engagement is responsible for the planning and performance of the audit. He selects the team accordingly so that the audit is completed effectively and efficiently. The audit strategy sets out the procedures, sets the scope, timing and direction of the audit. ISA 300 requires the auditor to consider specific matters when establishing the audit strategy, and provides a list of typical matters to be considered. The auditor is responsible to correctly set the strategy so that the audit objectives is achieved. The audit strategy contains the general audit plan, risk

The audit will assess each function of the business and how it would affect the company overall if the function were unavailable, interrupted, or changed. The types of events that may significantly impact the business function, the advantages and disadvantages of failure for each function, and alternatives for each risk if it fails. The following aspects of the business will be considered: Safety, Revenue, Costs, Legal, Related Exposure, and Security Breaches.

The company’s financial report ending 30 June 2009 was audited by Mr. DELOITTE TOUCHE TOHMATSU and Mr. TOM EMBASSI, of the Charted Accountants firm “DELOITTE”

Arens, A. A., Elder, R. J., & Beasley, M. S. (2013). Auditing and Assurance Services. Old Tappan, NJ: Pearson Education.

The auditor must obtain an understanding of the entity and its environment, including internal controls, so that they can identify and assess the risks of material misstatement on financial statements due to fraud or error and design and perform further audit procedures.

Internal auditors cannot effectively provide an analysis on the company’s internal dealings as they are part of the company. External auditors, however, can observe these processes from the outside and then determine where the funds of the company and whether the dealings adhere to the regulations. Using external auditors in a company prevents conflict of interest from happening. Conflict of interest is a situation where an individual or organization has multiple interests and of those multiple interests, one could possible corrupt the motivation for an act on the other when the auditor has any kind of beneficial interest in their client’s performance. In other circumstances, there is also the threat of familiarity where auditors become

Identify the potential risks which affect the company and manage these risks within its risk appetite;

The role of internal audit is to provide independent declaration that an organization’s threatadministration, governance and internal control processes are functioning effectively. Internal auditors deal with concerns that are essentially important to the existence and success of any organization. Unlike external auditors, they aspect beyond financial possibilities and statements to reflect wider problems such as the organization’s reputation, development, its power on the location and the approach it treats its organizations.In summary, internal accountantssupport organizations to thrive.

Risk management is the term applied to a logical and systematic method of establishing the context, identifying, analyzing, evaluating, treating, monitoring and communicating risks associated with any activity, function or process in a way that will enable organizations to minimize losses and maximize opportunities. (Lecture notes)Risk Management is also described as 'all the things you need to do to make the future sufficiently certain'. (The NZ Society for Risk Management, 2001)

1. Financial (Substantive) Audit: A financial audit is an independent, objective assessment of an organization 's financial reports and financial reporting forms. The primary purpose for financial audits is to give regulators, stakeholders, administrators, and managers rational assurance that financial statements are precise and complete. The purpose of a financial statement audit is to add believability to the reported budgetary position and execution of a business. The Securities and Exchange Commission

• The independence of the entity 's external auditors and the quality of their audits

The purpose and responsibility of an audit is to provide reasonable assurance that the financial statements are free from material misstatements whether due to fraud or error. The audit will follow the authoritative guidance provided by the PCAOB and AICPA auditing standards. In relation to Johnson & Johnson Company, it would be a plus if the auditor had experience with the Consumer, Pharmaceutical and Medical Devices, but not necessary since a firm would be able to hire an expert to consult on the audit. The test will cover risk assessment procedures, tests of controls and substantive procedures.

There is no organisation that is not faced with risks because every company has its own unexpected negative outcomes. According to Hopkin (2012, xviii) risk is everywhere and derives directly from unpredictability. The process of identifying, assessing and managing risk brings any business full circle back to its strategic objective for it will be clear that not everything can be controlled. Risk management involves a healthy dose of both common sense and strategic awareness coupled with an intimate knowledge of