The Audit Plan Of K & S Corporation Limited Essay

This course is the first in a two-part series that deals with auditing a company 's financial reports, internal controls, and

Independent audit in turn makes the financial statements more credible and reliable source of information

One of the most important factors is reliability of financial statements. Reliability is further ensured by audit of financial statements. At last but not least, financial statements should be made in a comparable format either with previous periods or with the competitors.

There are three kind of financial statements for companies which the content reflected different information. Among them, the first is the balance sheet, this statement reflects the financial situation of enterprises. For example, some of the listed companies wants to reflect good financial position in the statement, they will want to increase total assets, decrease accrued total liabilities, and then of course increase owners ' equity, making investors mistakenly believe the company has great investment value, thereby misleading public opinion and investors. Beside the balance sheet the other two financial statements are the income statement and cash flow statement. These two statements reflect the business situation of enterprises. The income statement is an important indicator to measure the performance of listed companies, it is closely related to the allotment and the profit. Therefore, in order to increase the profits of listed companies, they will have to Increase revenue, earnings, decrease expenses, costs and losses (Temte, 73). It helped increase tax evasion, embezzlement and other economic criminal activities. A large number of cases being investigated, all related to the accountants making the fake accounting entries. Therefore, the accounting credibility loss has restricted the development of the market economy. In a business, accountant often times handle the tax problem, so if

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.

What would the effects be on the capital markets if investors did not perceive financial statement auditors as having independence, objectivity, and integrity? Investors rely on the issuers’ financial statements. They need to get the assurance that the financial statements are free from error and are objective & honest. If the investors do not perceive auditors of financial statement as independent of a company, honest, & non-biased then will be less likely to invest in that company and its market value will go down.

Financial accounting statements can help a user to make future decisions by showing the concerned business’s health. It shows where money is being generated, spent and lost, depicting the financial performance and financial position. The statements can also help in situations such as raising fresh capital in the form of a loan, e.g. a bank will most likely require these statements to show the business’s credibility or worthiness. The statements help influence managerial decisions on which direction the business needs to head, and how to best maximize profit.

During the performance of this integrated audit, require numerous judgments about the internal control and overall financial reporting and how well it addresses risks of material misstatements within the financial statements (AICPA, 2014). After re-evaluating the previous errors found from the previous audit, the audit team found the corrective actions to be appropriate and justified in elimination of human error by implementing additional checks and balances within the manual process. No additional misstatements have been found and all internal controls off the financial reporting seem appropriate and just.

The auditing firm has been in engagement with the company throughout the period when the fraud was being committed. One of the common and clear indicators of possible fraud was the company’s cash flow statement. The company experienced positive growth in its profits from the year 1996 through to the year 1998. However, a close analysis of the cash flow statement shows that the company had experienced negative figures of cash flow from both operating and investing activities and positive cash flow from financing activities which would not sufficiently offset the negative cash flows from operating and investing. It is therefore evident

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;

A financial statement is a document in which the current situation of the user at the end of the fiscal year is known. The financial statements are important because they are serious and official recognition that allow a much organised idea finance documents. They help not only to see the past, but to learn from it to improve the following year. They also allow study of clear and effective way he was saved was spent and more. The financial statements reflect the financial position of the company, financial performance and cash flows of the company, it is significant to note that the correct depiction of the impacts of transactions and other events and circumstances according to the explanations and a criteria identification of assets, liabilities, income and expenses goes in the same outline (Schroeder et al., 2011).

These statements can serve as an adequate early warning material for the protection of investors and creditors. Therefore, improving auditors’ independence will increase the reliability of corporations’ published financial statements and give assurance of that reliability to users of those financial statements. Some of the ways to strengthen auditors independent is rotation of audit firms at regular intervals.

The General purpose of a financial report is to meet the needs of a specific external parties in accordance with general purpose financial report. In order for a company to achieve this they must first comply with certain accounting standards and NZ framework. Examples of accounting standards such as being “true and fair” which means that the financial statements of company has to be free from misstatements and faithfully represents the financial performance and position of a company,( True and Fair, 2014). The true and fair value of financial statements is widely recognized as one of the best responsibilities of the management of a companies in the corporate law of other countries including NZ. There are a different entity or business that audit company’s financial statements and it’s up to the auditors to decide whether a

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).

Financial statements provide a view on the company’s financial changes within a specific reporting period and confirm its overall state. They give information such that they provide shareholders with a picture of how well the company is doing. These enable them to evaluate a stock’s worth and aid them in making stock-related decisions such as buying/selling/retaining which provide them further on the status of their return on investment. Additionally, they reflect how the shareholders’ money are invested, its outcome and effect to the company.