An International Real Estate Investment Trust Organization

The auditor must remember that all information collected during the audit needs to be sufficient enough to further the audit process. The information must not only possess the two qualities, relevance and reliability, but it should also test various assertions. For instance, in the audit of Walmart, the auditor should make an attempt to acquire information such as financial statements from the company’s bank, as opposed to acquiring the statements from Walmart’s management. Taking such crucial information from Walmart’s management will put the reliability of that information into question. It is possible that management may manipulate the financial statements, so that they are more appealing to the public and investors. Management may do things

The auditor’s report is a major source of information that officially evaluations an entity's financial status. In conjunction with the auditor’s official evaluation of the entity’s financial status, the auditor provides an assessment of the firm’s monetary position and future. Auditors can provide four types of reports: unqualified opinion, qualified opinion, adverse opinion, and a disclaimer of an opinion. An unqualified opinion (clean report) which is issued in most cases expresses the opinion that financial statements are presented in accordance with general accepted accounting principles and is void of misrepresentations. The unqualified

The auditor must review disclosures for adequacy, and if the auditor concludes that information disclosures are not reasonably adequate, the auditor must state so in the auditor’s

A qualified auditor should make wise judgment when planning an audit. The auditor should be inquisitive and should be quick to notice some irregularity in the financial statements. This inquisitiveness should have guided the auditor to understand why Leslie Fay sales increasing while sales in the overall garment industry had been going down. This would have led to the querying by the auditors as to how Leslie Fay was the only garment industry that had not suffered a decline in sales during the late 1980s and early 1990s recessionary period. This in turn would have led to a need to plan an audit on the revenue cycle and tests on the internal controls in relation to the revenue cycle.

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.

When organizations present financial statements for review, the information contained in the statements should be appropriate and clear enough as to enable evaluators or auditors of the information to make accurate estimations of the presenting organization’s financial status.

The second section of this report looks at the first recommendation which suggests firms to report different set of accounting information for its different users. Professional investors are very critical of the two approaches put forward as they do not want exclusion on financial information. The third section of the report looks at the second recommendations on how auditors can play a significant role in encouraging firms to omit immaterial disclosures. Profession investor can rely on auditor’s notes on materiality of financial disclosures when making financial judgments however there are still questions on what is thought to be material. The final part of the report

The chief executive of the company was closely working with the vendors whose confirmations were vital in the auditing work and hence they could have submitted false confirmations. The auditing firm established a national risk management program for its clients and so national reviews were done to identify the high risk items in the financial statement. The vendor allowances were particularly high but they were not documented. As such, the auditors were supposed to demand for the documentations and compare them with the real figures. It is however noted that most of the documentations received were non-standard and this could have led to a different audit report given that vendor allowances were earlier identified as a high risk area. Inventory management was found to be poor especially in the allowances for inventory reserves. The audit firm was therefore obliged to carry out a thorough evaluation of the inventory reserves and determine whether it was reasonable. The valuation was also supposed to include all classes of inventory but for the case of the company, the evaluation excluded instances where no sales had been made. Hence, this evaluation could not accurately represent the position of the inventory reserve in the company. (Waters,2003)

Financial statements of the company are significant for the investors who would like to venture into the business operation. It gives them the insight whether the business is making profits or it is doomed to fail;

The objective is to ensure that auditors obtain sufficient knowledge of the business of the entity to enable them to identify and understand the events, transactions or practice that may have a significant effect on the financial statements or the audit. This knowledge of the business helps to assess the levels of control and inherent risk and to determine audit procedures.

An auditor would be interested in the above section, but just as important would be the Investing and Financing Activities sections. Auditors need to know where the company invested its money and where it received its money in order to figure out whether

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 important function of the accounting field is to provide external users of financial statements with assurance that the financial information being presented is both reliable and accurate. This basic function of accounting is so important that there is an entire field of experts, called auditors, dedicated to assuring its proper performance. Throughout history there have been many instances in which the basic equilibrium between an institution and current/potential investor has been threatened due to a lack of accountability and trust between the two parties. This issue has been the catalyst for many discussions regarding the proper procedures a firm should follow in order to provide

Since reliable financial information is essential for investors and other stakeholders to take adequate decisions, this reliability must be backed by independent review performed by independent and certified auditing firms, which are supposed to verify and certify financial statements issued by a company’s management. If the auditor is not competent and independent from management, the audit of the financial statements loses its credibility (Schelker, 2013, p.295). According to Impastato (2003), because of audit failures, accountants are to blame for investors losing billions of dollars in earnings in addition to market capitalization (as cited in Grubbs & Ethridge 2007).

A company prepares financial statement to provide information about its financial position and performance. This information is in turn used by a wide range of stakeholders (such as investors, banks, customers, suppliers etc) in making economic decisions with respect to respective economic interest in the company. Typically, in terms of ownership by investment in shares of the company, shareholders though own the company but do not manage it. Therefore, the shareholder and other such stakeholders to get comfort in taking sound decision need independent assurance from the auditors that the financial statements reflect true and fair view of the company affairs in all material respects. Hence, in order to enhance the level of