Question

Briefly explain why defining the scope of an audit is important.

Answer 1

Solution. An organization exists to do business to meet its pre-determined objectives of profit making along with societal responsibility. In order to sustain in today's competitive economic market, proper recording and publication of activities undertaken by an organization is necessary to maintain responsibility among internal workforce, external stakeholders and to eliminate fraudulent activities and tax evasion. Appointment of an auditor to perform audit is to ensure compliance of internal management's and employees data and books with that of established policies and procedures. Defining the scope of an audit facilitates in providing with the information of the depth of involvement, legal requirements and bodies, entity insights, reliability of data and information in communication with internal management meetings for evaluation and publication of reports within the stipulated time.