An Audit Of An Auditor

In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial

An important decision for any shareholder is deciding whether or not to do business with that company. When a business is audited, the operations are reviewed to make sure that nothing is being hidden. An auditor will review the company’s financial statement and practices to confirm that each are direct and correct. The financial statements are the business’s way of representing them and showing that they are following the Generally Accepted Accounting Principles. The audit process is an important one because it provides a platform for the auditor’s opinion concerning the financial statements of the company. As part of the audit process the auditor will conduct an audit plan that outlines a number of actions that he or she will be perform while also detailing the reason for those actions. With every audit, the business’s management is in charge of handing over the financial statements that the auditor will review; while the auditor will review the statements for any material or immaterial misstatements.

Because the audit committee is representing the shareholders, and assist the external auditors to reduce the information asymmetry, as the agent for the shareholders towards management (agency principal). By hiring the audit committee and the external auditor, it will monitor the managements as shareholders agents, in order to minimise or to reduce the risk of management actions that harm shareholders interests.

“Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria” (Arens A., Elder R. J., Beasley M. S. 2010). Auditing of a company should be done by an independent person that has no affiliation with the company that is being audited. The auditor needs to be educated enough to process the audit.

As a auditor，it is impossible to report all the frauds that exist in the financial statements, but auditor has the responsibility to expose the almost fraud in the financial statements and report the illegal behavior, which has a direct significant impact on the financial reporting. However, preventing fraud not only using management method, but also other methods.

The presence of an external auditor allows creditors, investors or bankers to use financial statements that have been prepared with confidence. Although it does not guarantee the accuracy of a financial statement, it provides users with some reassurance that a company’s financial statements give a true and fair view of its financial position and its business operations. It also provides credibility, where in business, is a major asset. With credibility, the willingness of investors, bankers and others to relate and undertake business projects with a company increases. Credibility is also important to build positive reputations.

An audit can be described as an official inspection of an organization 's accounts and is typically conducted by an independent body. Companies often hire external auditors in addition to auditing themselves. External auditors are accountants who work independently of a particular company. They examine company records and operations to ensure financial statements are accurate. External auditors are important to establishing your small business ' credibility and to ensuring compliance with tax laws.

While many people think of management and accounting positions when mentioning a business, one important role that goes unnoticed is internal audit. Internal audit is an important part of a business. Without internal audit, many businesses would be subjected to theft and fraud. One should note that theft and fraud is not the only reason to have an internal audit. Having an internal audit system can help a company protect against lawsuits from employees and customers. Placing policies and procedures around a company’s assets is crucial to the organization’s success in the future. The policies and procedures put in place by the Institute of Internal Auditors are guidelines the company should not take lightly. Every year the company loses

Financial statements are an important part of any company. The financial statements provide potential investors, as well as the company’s management and creditors, with useful information about the financial position of the company. The financial statements of a company comprise the income statement, the balance sheet, and the statement of cash flows. Financial statements are important, but understanding and being able to use the information presented in financial statements to make decisions is also very important.

The Charted institute of internal auditors states that the role of an internal auditor is to provide independent assurance that an organization’s risk management; governance and internal control processes are operating effectively. Internal auditors are obliged to provide an impartial and objective view. They are independent from the operations they evaluate and report to the senior managers and governors.

Bankers usually use an entity’s financial statements for a wide range of reasons. Such as, for purposes of determining whether or not to lend capital to a company; be it working capital or otherwise. To underscore the importance of accuracy as far as financial statements are concerned, banks demands that businesses in need of loans avail financial statements which are audited and prepared in conformity with the GAAP provisions. Banks may then utilize such statements for analysis including the computation

The aim of this essay is to study the function of external auditors in order to analyze why it is important to be independent. The primary mission of external auditors is to review and evaluate all the financial records of a company or corporation. They provide an objective opinion on the organization’s financial statement and effectiveness of the accounting polices in order to help management to make decisions. If the independence of the external auditors is impaired, the public will doubt the quality of professional auditing services, and the consequence would be very serious, just like the bankruptcy of Enron led to the disorganization of Arthur Andersen, once a giant accounting company in the world. In order to maintain and increase

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.

The role of auditor as a specialist is to review the company’s accounts in order to certify the legitimacy and validity of its financial records. They work in the places like independent certified organisations or accounting departments. Furthermore, auditors can give an advice and warn about possible risks and cost savings that company could made. As money going in and out of organisations, auditors examine the records and check if it is processed correctly. Their obligations also include visiting factories for checking stocks and companies’ equipment.

An audit is the examination and checking of financial statements by a professional auditor or accountant who has had no part in its preparation. The process involves an examination of the evidence from which the final revenue accounts and balance sheet, or other statements of an organization have been prepared, in order to ascertain that they present a true reflection of the summarized transactions for the period under review and of the financial state of the organization at the end date, so enabling the auditor to report thereon. The objective of the ordinary audit of financial statements by the independent auditor is the expression of an opinion as to the fairness with which