Assessment 1

AUDITING IN
CONTEXT
 TABLE OF
CONTENTS
01 Introduction: analysis

02 Rights and duties of auditors

03 Assurance provided on audit of FS

04 Benefits of an audit

05 Purpose of ISA and its importance

06 Conclusion

07 Reference list

Your NFP Name

SDG Progress Report 2020
SCENARIO
 INTRODUCTION
In this report we analysis auditing and its operations as
well as its importance to a company.
An impartial study of the financial statements is known
as an audit, and it is carried out by certain, professionally
qualified auditors. Auditors conduct thorough
examinations of the books of accounts and offer a fair
assessment free from prejudice or ulterior motives.
Following are a few Arguments for the Necessity of
Auditing:
Government Compliance: An external auditor can
assist in identifying instances where your accounting
procedures or books no longer comply with the
relevant legal requirements.
Error avoidance: On often, a third party may identify
something that was probably missed.
Enhances Internal Systems and Controls: Auditors
learn about the business's overall systems and controls
environment in addition to the financial statement. By
doing so, they will be able to spot weaknesses in the
accounting systems or controls and offer suggestions to
improve them, increasing business efficiency and
reducing the risk of fraud or error.

(“What is an Audit? - Types of Audits & Auditing

Certification | ASQ,” n.d.)
 Encourage Accountability: Auditing aids in
encouraging responsibility among the organization's
managers and workers.
Risk assessment: Through a methodical risk
assessment, an internal audit program helps
management and shareholder to identify and
prioritize risks.
Directors' responsiblitites Auditors' responsiblitites

Utilize their authority Determining and evaluating

the overall risk of FS being
Promote the company's success materially misrepresented

Utilize your own judgment. Capable of carrying out audit

duties and processes that are
Use reasonable judgment, skill, relevant to the recognized
and diligence. audit risks.

Stay away from interest Gather adequate and relevant

conflicts audit evidence.

Refusing to accept rewards Gaining knowledge of the

from outside sources internal controls that are in
place
Declare your involvement in a
prospective deal or transaction. Conclude on how much the
accounting generally reflects
the going concern premise.

Offering assurance of honest

(“Directors Duties in relation to Financial
Reporting,” 2022) and fair value in FS
RIGHTS AND DUTIES
OF AUDITOR

Rights:
Check the records, which include the right to view all
financial and non-financial data for the auditing period
including management accounts, financial reporting, and
accounting systems. Auditors may request supporting
documentation for expenses and income in order to
comprehend and verify them.

The auditor ought to have the power to know when the

annual general meeting will take place and the right to join
because it is a crucial meeting that only happens once a
year.

The right to know what kind of transaction, occurrence, or

recording was made in the companies' financial accounts.

The option to leave the organization if they feel that their

freedom is being compromised

The freedom to express an opinion based on information

discovered during an audit. They have the right, for
instance, to indicate that they believe the financial
statements to be honest and fair based on the absence of
any substantial misstatements.
Duties:
The International Standard on Auditing should be
followed when conducting an audit.

Additionally, auditors are required to disclose any

falsifications, mistakes, or frauds. Through their report,
they can do this. The auditing rules also instruct auditors
on what information to disclose in these situations.
However, an auditor must conduct appropriate inquiries
once they become aware of such situations and report
such instances after verifying their presence.

In the report, the examination's findings should be made

very clear.

It is the responsibility of the auditor to submit an audit

report based on their observations. They must also take
into account the deadline set with the client but not
required to publish a report prior to a deadline, though.
Other factors, such as the quality of the audit and
whether the auditor has finished their work, may also be
involved.

Making sure they are always impartial and client-free.

If necessary, they must participate in group audits.

(pisey.daung, 2021)
 Level of Assurance

What is assurance?
It entails expressing an opinion regarding a certain
piece of information so that its users can act with
confidence knowing that there is a lower chance that
the information is "incorrect."

Elements of assurance
Three party involvement: Practitioner,intended
audience,accountable party
5 Elements

Appropriate subject -The information that the practitioner

will be examining

Suitable criteria: The standards, recommendations, rules, and

regulations used to judge the subject matter

Sufficient evidence :A strong support for the opinion or

conclusion must be provided by sufficient appropriate evidence.

Assurance report: The result of the assurance engagement that

expresses a finding or opinion regarding the topic

(“ACCA Notes,” n.d.)

 Levels and its types:
Reasonable Assurance
Limited Assurance Engagements
Engagements

Assembles sufficient pertinent evidence to

Assembles enough relevant facts to draw only
permit the drawing of reasonable
a few conclusions.
judgments.

Carries out extremely rigorous procedures,

Performs a much smaller number of
including tests of controls and substantive
operations, mostly inquiries and analytical
procedures, to gather enough relevant
operations
proof.

Conclusion: The subject matter complies Conclusion: The topic is plausible given the
with the appropriate standards in all circumstances according to the stated
material respects. relevant criteria.

Gives an assurance opinion that is Gives an assurance conclusion that is

positively expressed. negatively worded

Provides a strong degree of assurance Provides a level of assurance comparable to or

(confidence) lower that provided by an audit

(“ACCA Notes,” n.d.)

Benefit of Auditing
It enables ABC co. to sit down and make Helpful suggestions for
improvements to create a more effective system of internal
control. It also assists ABC.co in identifying gaps in the
accounting processes.

By offering an Impartial professional evaluation, it aids in

lowering the potential for fraud and subpar accounting. Our
experts create tests that are intended to lower the risk of fraud
and theft in the ABC.co's workplace.
Management and individuals in charge of governance gain access
to our advice services through an audit engagement. This is given
to ABC.co based on the knowledge we have gathered about
ABC.co activities, which spans a wide range of topics. We
examine and offer advice on the more complex elements that
ABC.co might find challenging to understand.

Through an audit engagement, management and those in charge

of governance have access to our advisory services. This is
provided to ABC.co in light of the information we have learned
about ABC.co actions, which cover a variety of themes. The more
difficult-to-understand components that are more complex are
examined, and recommendations are given.

It can be recalled by the abbreviation "HIRED."

lity
ua
In ses

r q ion
de

h e at
as

g
Hi form
pe me
nd nt

in
s

en
ed

t
z
es
si
i
ha
n c
p
cie
m

ha
Re
i

are e
f

z
e

a
d
D

rd
u ce

icity
he nt
aut eases
r (CRM, 2016)
Inc
 Purpose and Impotance
of ISA
International Auditing Standards (ISAs)

It belongs to the IFAC subsidiary boards.

They are accountable for creating and advancing
international standards for auditing (ISAs).

Objectives
To develop and disseminate public interest
accounting standards that should be followed
when presenting financial accounts, as well as to
encourage their adoption and observance on a
global scale.

To strive toward the enhancement and

harmonization of the practices and standards for
the preparation of financial statements.

(“ACCA Notes,” n.d.)

 Importances
Universal Appeal and Application:
For audits, there should be a common standard that both
professional auditors and firms themselves should adhere to. The fact that
ISA draws from a variety of cultural perspectives makes it less prejudiced
toward any one place and more accurately reflects the values of that region.
Applying the same set of standards when dealing with global corporations is
simpler for auditors. Otherwise, they would be obligated to account for all
the variations among the many geographic areas where the company operates.
When compared to employing a single, standardized auditing system, which
makes things much simpler for everyone involved, this can make the process
much lengthier and far less efficient.

Expert Guidance:
As it was created by experts in the field, ISA offers auditors precise
instructions to follow. For many firms, this can result in a more cost-effective
strategy because they may be able to perform an internal audit themselves
without incurring the expense of employing an outside consultant.
Your business can be in the best possible position moving ahead if you can
demonstrate that these have been adopted.

(Walker, 2018)
CONCLUSION
This project has covered all areas related to
auditing and its operations. Have discussed rights
and duties of auditors , directors responsibilities. The
level of assurance that we can provide is also been
mentioned. And also this project highlighted need
and importance of auditing to your company
ABC.co.

As a newly started up company, ABC.co need much

more external support and identification of its
errors and frauds in its operation to make it more
efficient and competitive in stock market. An audit
process will help in identifying threats and forecast
your risk and let you amend needed changes .
REFERANCE LIST
What is an Audit? - Types of Audits & Auditing
Certification | ASQ [WWW Document], n.d. . What is
an Audit? - Types of Audits & Auditing Certification |
ASQ. URL https://asq.org/quality-resources/auditing
(accessed 11.20.22).
Directors Duties in relation to Financial Reporting
[WWW Document], 2022. . Default. URL
https://www.acra.gov.sg/how-to-guides/preparing-
financial-statements/directors-duties-in-relation-to-
financial-reporting (accessed 11.22).
P., A.H. pisey.daung, 2021. Auditor Rights and Duties
[WWW Document]. Accounting Hub. URL
https://www.accountinghub-online.com/auditor-
rights-and-duties/ (accessed 11.22).
ACCA Notes [WWW Document], n.d. . ACCA Notes.
URL https://onlineacca.com/accanotes (accessed
11.20.22).
CRM, Th., 2016. The Benefits of having an Audit |
Chapman, Robinson & Moore [WWW Document].
Chapman, Robinson & Moore. URL
https://crmoxford.co.uk/the-benefits-of-having-an-
audit/ (accessed 11.20.22).
Walker, G., 2018. The Importance of Adhering to
International Standards for Auditing [WWW
Document]. BUSINESSFIRST. URL
https://www.businessfirstonline.co.uk/articles/the-
importance-of-adhering-to-international-standards-
for-auditing/ (accessed 11.20.22).