Preview

Auditing Assignment 1

Satisfactory Essays
Open Document
Open Document
717 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Auditing Assignment 1
Assignment 1
Name: Leung Hiu Ting
Student no.10348622
Course : Auditing
a. Outline the main reasons for a company requiring an external audit.

Nowadays, a lot of company’s ownership and management is separated. It had major influences for auditing. Shareholders were concerned that their funds may not be used in proper ways to maximize the value of the company by appointed managers.
For example, management may distort or withhold material information in their financial statements for personal gain, there is a need for shareholders to monitor and control the managers in order to discourage such self-interested behavior. Stakeholders can be influenced greatly by an audit. It may mean the difference on the company getting a bank loan or for an investor to bring in capital.
The external audited financial statements were expected to provide some opinion to the reported earnings in the financial statements prepared by management which are within legal regulation and GAAP.

b. Discuss the external auditors’ right and duties as governed by Companies Ordinance.

For the right of auditors, auditors may request company to provide all information of which management and, where appropriate, those charged with governance are aware that is relevant to the preparation of the financial statements such as records, documentation and other matters. Additional information that the auditor may request from management and, where appropriate, those charged with governance for the purpose of the audit. Unrestricted access to persons within the entity from whom the auditor determines it necessary to obtain audit evidence.
The primary duties of an audit is to review and verify the company's financial statements to form an opinion about the company's financial statements. They may give a qualified, unqualified, adverse opinion or even a disclaimer. Each one of these opinions can be vital for an organization. These opinions state whether the financial information was justly represented,

You May Also Find These Documents Helpful

  • Powerful Essays

    SUBJECT: Beginning the Audit Report (Engagement letter, Engagement checklist, Outline of timeframes and milestones of the audit)…

    • 1203 Words
    • 5 Pages
    Powerful Essays
  • Satisfactory Essays

    Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatements.…

    • 575 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    The management has the final responsibility for the integrity of internal controls. The client prepares the financial statements and the management makes certain claims or assertions about these numbers. The auditor's validate the management's assertions by identifying audit objectives, which are the auditor's version of assertions on the financial statements. The auditors are hired by the audit committee, which is comprised of key members with financial expertise and not the management. The audit committee relies on the management to run the daily operations of the business, and maintain quality and integrity of the accounting and reporting practices, internal controls, and financial statements. The management is also responsible for legal and regulatory compliance, the auditors’ qualifications and independence, and the performance of the company’s internal audit function and independent auditors. The audit committee is responsible for the oversight of all of the above management responsibilities. Other responsibilities of the audit committee include:…

    • 545 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Audit Report Apollo Shoes

    • 1058 Words
    • 5 Pages

    The firm will audit the financial statements for that year in order to express an opinion “on the fairness with which they present, in all material respects, the financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America” (Arens, et. al, 2012, p. 214).…

    • 1058 Words
    • 5 Pages
    Powerful Essays
  • Satisfactory Essays

    3. Determine whether deficiencies existed in the IT environment, and suggest ways to improve audit trails, data integrity, and policies and procedures in order to reduce the risk of fraudulent activity.…

    • 346 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Chapter One

    • 5480 Words
    • 22 Pages

    A large corporation with securities listed on a stock exchange is required by the rules of the stock exchange and by the rules of the Securities and Exchange Commission to provide an audit report with the annual financial statements furnished to its stockholders. It also is required to engage the auditors to provide an opinion on its internal control. Apart from legal requirements, however, a large listed corporation recognizes that it must maintain investor confidence in the reliability of its financial statements and internal control over financial reporting if it is to continue to be able to…

    • 5480 Words
    • 22 Pages
    Powerful Essays
  • Satisfactory Essays

    Stakeholders in companies rely on the auditors for confirmation that financial information is accurate. The auditor 's opinions and observations are presented to interested parties in the form of the audit report. Any reservations the auditor may have to the fairness of the financial statements is stated in the audit report. Also included is a summary of any justified departures from generally accepted accounting principles (GAAP) and their effects.…

    • 442 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    We will audit the company’s financial statements for the year ending December 31. 2009. for the purpose of expressing an opinion on the fairness with which they present, in all material respects, the financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. We will also audit the company’s internal control for the year ending December 31. 2009. for the purpose of supporting an opinion on internal control over financial reporting and supporting the audit of the financial statements.…

    • 433 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    During the completion of an audit, a sample is selected and then evaluated against some criteria to determine whether the auditor believes the financial statements to be correct and in accordance with Generally Accepted Accounting Principles (GAAP). One of the three important steps in the audit process, after the client has been accepted, is to plan the audit. In this stage, analytical procedures are very important to identify high risk areas which should be tested more intensively. These procedures are used to evaluate whether or not the five main management assertions are being followed. The five assertions are existence or occurrence, completeness, valuation or allocation, rights and obligations, and presentation and disclosure.…

    • 297 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    External Reports on the other hand, are to provide information on the financial position, performance and changes in the financial position of the company for a variety of users such as the government, shareholders, financial institutions, employees, vendors, and the public itself. These reports should be very understandable, and are assumed to be read by users who have reasonable knowledge on financials and business, and for those who are willing to study the information diligently. Most of the external users depend completely on these reports for their decision making. The reports are expected to be reliable so the companies should employ external auditors that are independent from the company. This is to avoid conflict of interests and bias towards the information presented by the company.…

    • 610 Words
    • 3 Pages
    Good Essays
  • Best Essays

    First of all, it is good to know what is the external auditors and its primary role. External auditing is an observation of annual financial reports of a corporation, for example, Balance Sheet, Profit and Loss account and cashflow statement. It is done by someone independent of that business, who play no part in day-to-day running of the organization and must not be controlled by the management of that corporation (St Helena Audit Service, 2006). The external auditors perform a key role in developing internal control, however, they do not have any benefits of working with company on every basis. The role and process vary from country to country, due to the developments of Financial Accounting Standards Board (FASB) merging with International Accounting Standards Board (IASB).…

    • 1648 Words
    • 7 Pages
    Best Essays
  • Satisfactory Essays

    AUDIT 2

    • 339 Words
    • 2 Pages

    Auditors are concerned about the management fraud that affects the financial statement. In other words, auditors are responsible to detect the frauds that cause materially misstated financial statement and auditors are not responsible to detect all frauds.…

    • 339 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Ocean Manufacturing

    • 2123 Words
    • 9 Pages

    a. (AU 314) The auditor should obtain an understanding of the entity and its environment in the following areas:…

    • 2123 Words
    • 9 Pages
    Powerful Essays
  • Powerful Essays

    Managerial decisions constantly affect the third parties who are the creditors and investor and hence the auditors have a duty to safeguard and protect them from misleading statements by the management. A lot of value is placed by the public on the independent financial statements since it enhances the degree of confidence to the third parties. Currently the financial reporting seeks to address more relevant information to the end user. Therefore there is more judgment that is put on them and increased subjectivity involved in management’s accounting. It is evident the end users of the financial statements need to be protected from deceit and extortion that may be as a result of management decisions which may be scrupulous and…

    • 1210 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    The objective of our audit is the expression of an opinion about whether your consolidated financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit will be conducted in accordance with auditing standards generally accepted in the United States and will include tests of your accounting records and other procedures we consider necessary to enable us to express such an opinion. If our opinion is other than unqualified, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed an opinion, we may decline to express an opinion or to issue a report as a result of this engagement.…

    • 689 Words
    • 3 Pages
    Good Essays