Internal and external audits are valuable to be audit compliant. Internal audits evaluate the performance within the organization by incorporating the functions of management; however, external audits involve external vendors performing an evaluation (Bateman & Snell, 2007). The majority of auditing conducted by Wal-Mart is handled internally by vigorously participating in its private-label auditing (Audits Play Crucial Role in Safety, 2008).
According to AS 3, Paragraph A8 “good audit documentation improves the quality of the work performed in many ways, including, for example:
To conduct the audit, the firm must acquire sufficient understanding of the internal control processes to help determine the nature and timing of the audit. However, the audit is not designed to identify deficiencies in internal control or provide assurance. The firm will make the audit committee aware of any significant deficiencies that come to Anderson, Olds, and Watershed’s attention during the audit.
the nature, timing, and extent of the procedures performed are consistent with the tailored audit program ; adequate in light of the results obtained; and documented in sufficient detail to provide a clear understanding of the purpose, sources, and conclusions reached (including reasons for these conclusions);
Auditors have the responsibilities as well as management to report internal controls. The auditors must examine closely management’s claim of effectiveness and also physically test the controls. After the examination, the auditors should express their opinion and any recommendations to fix any internal control weaknesses.
2.3 Breach of duties by Internal Auditor According to the Institute of Internal Auditors (IIA), (2011), the internal auditing is a team of consultants, a department and a division or other practitioner which independent, have objective assurance and conduct a consulting activity which is designed to add value and improve the
The management report should be presented in an appropriate and professional style with a coherent structure, logic and connected line of analysis, evaluation and reasoning. This is worth 10% of the total marks.
INTRODUCTION 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.
Internal Auditing International Professional Practices Framework (IPPF) 2011 and Institute of Internal auditors (IIA), Defines, the Internal auditing as an independent, objective assurance and consulting activity intended to add value and improve an organization’s operations. It helps an organization to achieve its objectives by bringing a methodical, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. The overall objective of internal auditing is to assist all members of management in the effective discharge of their functioning, by endorsing them with objective analysis, appraisals, recommendations and pertinent comments concerning the activities reviewed. The Institute of Internal auditors under the glossary of the Standards for the Professional Practice of Internal Auditing,(IIA 2004c:25) outlines the concept of ‘value added’ in the integrity and objectivity of internal auditing and financial report scrutiny states that:(Institute of Internal Auditors
1-37: Briefly describe the various roles of the following organizations that affect the external auditing profession and the nature of those effects:
Most of these laws are used within an organization as well to help aid in the accurate reporting of the financial reports and help them organize internal and audit controls within the organization to prevent potential fraud and misappropriation of funds. Sarbanes-Oxley Act 2002 mandates that all preparers, auditors, analysts, and users operate and know the importance of governance and internal controls. (Huefner, 2011) The Treadway Commission’s (COSO) The Committee of Sponsoring Organizations lists the objectives of internal controls and its importance. (Huefner, 2011) Internal Controls have to be monitored often. These are controls that change overtime based on the needs and the functionality of the organization. Random audits are one way to identify problems that may arise with internal controls. If this is not done often, it suggests that there could be a weakness in internal controls. Weakness in controls leads to fraud to occur within a company. If there is no monitoring of the internal controls than there is a risk of fraudulent behavior among employees and potential misappropriation of funds when reporting financial reports to the federal government. There is no validity to financial reports created and the auditor or professional accountant completing the financial reports
statements 19. An auditor performing an audit of internal control over financial reporting would be required to:
Auditor’s Reports Microsoft. On July 31, 2008, the independent registered public accounting firm of Deloitte and Touche, LLP submitted their audit to the Board of Directors and Stockholder of Microsoft Corporation. The Committee of Sponsoring Organizations set forth the criteria in Internal Control – Integrated Framework which was adhered to by the auditor’s. The criteria specified that the audit should focus upon how the internal controls impacted the financial reporting of Microsoft. In addition, a Report of Management on Internal Control Over Financial Reporting was submitted with the audit. This report is used to assess how well the management of Microsoft controlled the financial reporting through internal control.
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.
5.1 What is internal Audit? The examination, monitoring and analysis of activities linked to a corporation 's operation, together with its employee behavior ,business structure and information systems. An internal audit is intended to assess what a company is doing in order to spot potential threats to the organization 's