Financial Systems and Auditing

1640 Words Oct 21st, 2010 7 Pages
Financial Systems and Auditing:
Contributing to the planning and conduct of an audit assignment and preparing audit reports.

Q 1

Report on the auditing function
(i) Legal duties and status of auditors

1. A company’s auditor shall I preparing their report, carry out an investigation:
- whether proper accounting records have been kept by the company and proper returns adequate for their audit have been received from brunches not visited by them
- whether the company’s individual accounts are in agreement with the accounting records and returns.
2. If the auditor finds out that some of the conditions stated above had not been done, the auditor shall state that in his/her report.
3. If the auditors fail to obtain all the
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The audit is conducted in accordance with auditing standards and guidelines as issued by the auditing practices board. Materiality
Materiality is an expression of the relative significance or importance of a particular matter in the context of the financial statements as whole.
A matter is material if its omission would reasonably influence the decisions of an addressee if the auditors’ report; likewise a misstatement is material if it would have a similar influence.
The auditors will normally attempt to set materiality levels at the planning stage of the audit.
The main reason auditors consider materiality at the planning stage is to help them to put audit risk into context. Risk
Before preparing the audit plan, the auditors should appraise the risk of material errors and regularises having taken place. (Financial difficulties of the client; known problems with internal controls)

(b)
Risks:
1. Old accounting system. Relies on manual input to transfer orders.
Impact
There is a lack of assurance that the input was properly stated. The amount might be reduced or increased in benefits of the person who makes an order transfer.
Reason for choosing
The risk above was chosen because it one of the important risks which the mangers and the owners of the company should try not to meet with.
2. Errors have been known to occur.
Impact
The following errors might have occurred in the result of an inaccurate
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