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In: Accounting

1. What is the importance of Public Sector Auditing Standards and Audit? 2. Why Financial Audit...

1. What is the importance of Public Sector Auditing Standards and Audit?

2. Why Financial Audit is important for public sector organizations?

(Requesting a detailed assistance on this so please do not spoil it with short and off topic answers, thanks)

Solutions

Expert Solution

Question 1:

Importance of Public Sector Auditing Standards and Audit:

  1. Financial Audit: Intended to verify financial statements, accounts and balances as per generally accepted accounting principles. Also, to verify money expended has been applied to the same purpose and premise for which it was obtained and within the boundaries of acceptable vagaries.
  2. Audit of Legality Concordance: Intended to verify all transactions, processes are in full accordance with the law of the land and do not in any case harm or influence an organization or an individual for its own means.
  3. Audit of efficacy or of programs: Intends to verify the result obtained from a plan for which money was employed is in conformance with the objective for which program was made.
  4. Audit of Economy and efficiency: Intends to verify the way resources have been managed. Whether resources have been acquired at minimum cost and employed for maximum benefit.
  5. Audit of Systems and Procedures: It is important for every organization which follows rules and laid down principles to verify its system and processes for improvement and quality conformance.

Financial and Audit of Legality concordance were originally grouped together to form Audit of Regularity and rest other audits were termed as Operational Audit.

After audit is complete it is necessary to file a report which has adequate representation of facts and figures, adequate content, adequate preparation, adequate opinion for the target audience to understand it better and enough publicity for the report.

Audit must be treated as an instrument for exercising control over processes, systems, finances and individuals to make governments and governing bodies more responsible towards the public and its resources, but it cannot be considered as an end unto itself.

Question 2:

Financial Auditing in Public sector Organizations is important because:

  • It Provides intended users with independent, objective and reliable information, conclusions or opinions based on sufficient and appropriate evidence relating to public entities.
  • Enhancing accountability, transparencyand encouraging continuous improvement and confidence in the appropriate use of public funds and assetsand of public administration performance.
  • Facilitating the functions of those bodies within the constitutional arrangement that are exercising general monitoring and corrective functions over those responsible for the management of publicly funded activities.
  • Creating incentives for change by providing knowledge, comprehensive analysis and well founded recommendations for improvement

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