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    The Role of The Auditor

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    ALCIDES
    The document discusses the roles of internal and external auditors. It describes internal auditors' responsibilities like compliance checking and their reporting lines. It also discusses external auditors' objectives like expressing an opinion on financial statements, their reporting lines to the board of directors and audit committee, and their interactions with management and internal auditors. The external auditor conducts audits to obtain reasonable assurance about the financial statements and communicates issues like control deficiencies and illegal acts to the bank.

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    The Role of The Auditor

    Uploaded by

    ALCIDES
    142 views30 pages
    The document discusses the roles of internal and external auditors. It describes internal auditors' responsibilities like compliance checking and their reporting lines. It also discusses external auditors' objectives like expressing an opinion on financial statements, their reporting lines to the board of directors and audit committee, and their interactions with management and internal auditors. The external auditor conducts audits to obtain reasonable assurance about the financial statements and communicates issues like control deficiencies and illegal acts to the bank.

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    The Role of the Auditor

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    The Role of the Auditor

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    The document discusses the roles of internal and external auditors. It describes internal auditors' responsibilities like compliance checking and their reporting lines. It also discusses external auditors' objectives like expressing an opinion on financial statements, their reporting lines to the board of directors and audit committee, and their interactions with management and internal auditors. The external auditor conducts audits to obtain reasonable assurance about the financial statements and communicates issues like control deficiencies and illegal acts to the bank.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    142 views30 pages

    The Role of The Auditor

    Uploaded by

    ALCIDES
    The document discusses the roles of internal and external auditors. It describes internal auditors' responsibilities like compliance checking and their reporting lines. It also discusses external auditors' objectives like expressing an opinion on financial statements, their reporting lines to the board of directors and audit committee, and their interactions with management and internal auditors. The external auditor conducts audits to obtain reasonable assurance about the financial statements and communicates issues like control deficiencies and illegal acts to the bank.

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    © All Rights Reserved
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    of 30

    UNIVERSIDAD ALAS PERUANAS INGLES III

    The Role of the Auditor


    Internal auditors

    External auditors

    OLINDA CHOQUEVILCA HUALLPA


    NERY CESIA CHUCTAYA PACSI Pgina 1
    Internal Auditors
    Responsibilities

    Reporting lines

    Professional affiliations
    IA - Responsibilities
    Compliance checking

    Compliance communication

    Transaction checking

    New product/service planning

    Operational efficiencies

    Assist regulators/external auditors


    IA Reporting Lines
    Board of directors

    Chief executive officer

    Chief operating officer

    Chief financial officer


    IA Professional Affiliations
    Certified Public Accountant

    Certified Internal Auditor

    Other professional organizations


    External Auditors
    Objectives

    Reporting lines

    Profession

    Interactions with others


    EA - Objectives
    Express an opinion on the consolidated
    financial
    statements

    Express an opinion on
    managements FDICIA control
    assertions

    Report to the Board


    Objective of the external audit (1)

    The objective of our audit is to provide you with our

    auditors
    report expressing an
    opinion on the financial
    statements referred to above. We will
    conduct our audit in accordance with U.S. generally
    accepted auditing standards. Accordingly, we will
    examine, on a test basis, evidence supporting the
    amounts and disclosures in the financial statements,
    assess the accounting principles used and significant
    estimates made by management and evaluate the
    overall financial statement presentation.
    Objective of the external audit (2)

    Concurrent with our audit, we will examine, in accordance with


    standards established by the American Institute of Certified
    Public Accountants, managements assertion about the
    effectiveness of the Companys internal control over financial
    reporting as of (fiscal year-end date December 31, 20XX).
    The purpose of our examination is to

    express an opinion as to
    whether managements
    assertion is fairly stated,
    in all material respects,
    based upon reasonable
    criteria.
    Objective of the external audit (3)

    As required by professional standards, we will


    meet with
    the Audit Committee to
    discuss (1) any
    relationships that may
    reasonably be thought to
    bear on our independence
    and
    transactions.
    (2) the quality of the
    Bank's financial reporting.
    The discussion of financial reporting will cover, but will
    not be limited to: significant accounting policies;
    accounting estimates, judgments and uncertainties;
    accounting adjustments; and unusual
    What level of assurance does the auditor

    Generally accepted auditing standards require that we


    obtain
    reasonable, rather than
    absolute, assurance that
    the financial statements
    are free of material
    misstatement, whether
    caused by error or fraud.
    Accordingly, a material misstatement may remain
    undetected. Also, an audit is not designed to detect
    error or fraud that is immaterial to the financial
    statements. However, we will bring to your attention
    immaterial misstatements and any fraudulent or illegal
    acts of which we become aware during our audit.
    Will the external auditor catch all misstate
    Generally accepted auditing standards require
    that we obtain reasonable, rather than
    absolute, assurance that the financial
    statements are free of material misstatement,
    whether caused by error or fraud.

    Accordingly, a material
    misstatement may remain
    undetected. Also, an audit is not
    designed to detect error or fraud that is immaterial
    to the financial statements. However, we will bring
    to your attention immaterial misstatements and any
    fraudulent or illegal acts of which we become aware
    during our audit.
    How about immaterial amounts?
    Generally accepted auditing standards require
    that we obtain reasonable, rather than
    absolute, assurance that the financial
    statements are free of material misstatement,
    whether caused by error or fraud. Accordingly,
    a
    material misstatement may remain undetected.

    an audit is not
    Also,

    designed to detect error


    or fraud that is
    immaterial to the
    financial statements.
    However, we will bring to your attention
    immaterial misstatements and any fraudulent or
    illegal acts of which we become aware during our
    audit.
    EA Reporting Lines

    Board of Directors

    Audit Committee

    Management

    Internal auditor

    Regulators
    Who does the auditor work for?

    This will confirm the arrangements between


    XYZ Bank
    (The Bank) and The
    External Auditor for the audit of the
    Bank's consolidated balance sheet as of December 31,
    2000, and the related consolidated statements of
    income and cash flows for the year then ending.
    EA Interaction With Others

    Board of
    Directors/Audi
    t
    Committee
    Report on management
    Report on financial statements
    Report on independence
    Report on controls
    What does the auditor do? (1)
    The objective of our audit is to provide you with our
    auditors report expressing an opinion on the
    financial statements referred to above. We will
    conduct our audit in accordance with U.S. generally
    accepted auditing standards.

    we will examine,
    Accordingly,

    on a test basis, evidence


    supporting the amounts
    and disclosures in the
    financial statements, assess
    the accounting principles used and significant
    estimates made by management and evaluate the
    overall financial statement presentation.
    What does the auditor do? (2)
    The objective of our audit is to provide you with our
    auditors report expressing an opinion on the
    financial statements referred to above. We will
    conduct our audit in accordance with U.S. generally
    accepted auditing standards. Accordingly, we will
    examine, on a test basis, evidence supporting the
    amounts and disclosures in the financial

    assess the
    statements,

    accounting principles
    used and significant
    estimates made by
    management and evaluate the
    overall financial statement presentation.
    What does the auditor do? (3)
    The objective of our audit is to provide you with our
    auditors report expressing an opinion on the
    financial statements referred to above. We will
    conduct our audit in accordance with U.S. generally
    accepted auditing standards. Accordingly, we will
    examine, on a test basis, evidence supporting the
    amounts and disclosures in the financial
    statements, assess the accounting principles
    used and significant estimates made by
    management and

    evaluate the overall


    financial statement
    presentation.
    EA Interaction With Others

    Management
    Suggestions for improvement
    Report on financial statements
    What has to be communicated to the Ban

    Generally accepted auditing standards require that we


    obtain reasonable, rather than absolute, assurance that
    the financial statements are free of material
    misstatement, whether caused by error or fraud.
    Accordingly, a material misstatement may remain
    undetected. Also, an audit is not designed to detect
    error or fraud that is immaterial to the financial
    statements. However,

    we will bring to your


    attention immaterial
    misstatements and any
    fraudulent or illegal acts
    of which we become
    aware during our audit.
    What has to be communicated to the Ban

    Any reportable conditions


    (defined by the
    American Institute of Certified Public Accountants as
    significant deficiencies in the design or the operation of
    internal control that, in the auditors judgment, could
    adversely affect the organizations ability to record,
    summarize and
    report financial data consistent with the assertions of
    management in the
    financial statements) identified during our audit of the
    financial statements or our examination of internal
    control over financial reporting (see below) will be

    along with our


    communicated to you,

    recommendations for
    improvement.
    What is a reportable condition?

    A significant deficiency in the


    design or the
    operation of internal control
    that, in the auditors
    judgment, could adversely
    affect the organizations
    ability to record, summarize
    and report financial data
    consistent with the
    assertions of management in
    the financial statements.
    What has to be communicated to the Ban
    As required by the Federal Deposit Insurance
    Corporation Improvement Act of

    we will also
    1991 (FDICIA),

    discuss managements
    assertion regarding the
    effectiveness of internal
    control over financial
    reporting before those reports are filed by
    management with the appropriate regulatory
    agencies.
    EA Interaction With Others

    Federal Banking Regulators


    Report on financial statements
    Report on reportable conditions
    Informal conversations
    Regulatory compliance LIMITED
    Who owns the auditors working papers?

    The working papers


    prepared in
    conjunction with our work
    are the property of The
    External Auditor, constitute
    confidential and proprietary information and will be
    retained by us in accordance with our policies and
    procedures.
    Can the Regulators view or have copies o
    working
    papers?
    However, if we are requested to make certain
    working papers and other material pertaining to
    the institution prepared in the course of
    performing the completed external auditing
    program available to the FDIC and the Federal
    Reserve Board (the banking regulators)
    pursuant to authority given to them

    we will provide
    by law or regulation,

    such access
    under our supervision.
    EA - Profession

    AICPA Code of Ethics

    SEC/Banking Regulators sanctions

    Civil lawsuits

    Firm reputation
    What standards must the external auditor
    The objective of our audit is to provide you with our
    auditors report expressing an opinion on the
    financial statements referred to above. We will

    conduct our audit in accordance


    with U.S. generally
    accepted auditing
    standards. Accordingly, we will
    examine, on a test basis, evidence supporting the
    amounts and disclosures in the financial
    statements, assess the accounting principles used
    and significant estimates made by management
    and evaluate the overall financial statement
    presentation.

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