Question

You are required to undertake a further review of the company and required to undertake the following:

? Review the following aspects of financial delegations and accountabilities within the company and determine their compliance with internal control procedures

- Expenditure and / or investment approvals

- Corporate governance requirements

- Loan and lending approvals

- Sign off authorities

? Determine timeframes taken to complete and release reports such as operating and cash flow statements

- Are these completed within agreed-upon timeframes?

- Do the deadlines comply with legislative requirements?

Answer 1

Concepts and reason;-

Auditing describes reliability, relevance, and analytical & logical skills of financial information theoretically. All other accounting concepts help the user to learn rules & techniques of preparation & analysis of financial information.

Auditing enables business managers, consultants, investors, regulatory agencies & creditors to take right decisions on financial aspects of the entity. Auditing also ensures that the financial information pertaining to entity is reliable, credible, relevant, & time bound.

Fundamentals

Audit: Audit is an art of collecting evidence through evaluation of the financial data & records.

Following are list of various types of audit:

Compliance audit: Compliance audit is the process of observing the compliance of financial statements to check whether the financial statements is prepared in accordance with the policies, procedures, accepted accounting principles, and government rules & regulations.

Example of compliance audit: Inspection of tax returns of an individual & the company by Internal Revenue Service with obedience of tax laws.

Operational audit: An operational audit is a process of observing organization’s day to day activities systematically, to check whether the resources are properly utilized & managed.

Example of operational audit;

The Auditing efficiency & productivity of employees & resources of technology used within the concern.

Forensic audit: Forensic audit is the process of detecting fraud, errors or undue influence undertaken by the entity in the management of its business activities.

Example of forensic audit: Identify the documents of insurance claim by an individual & company.

Financial statement audit: The financial statement audit is process of examining the financial statements, whether it is made in accordance with the generally accepted accounting principles.

Auditors: An auditor is a qualified professional who is responsible for audit or evaluation of the financial transactions of entity.

The following are the list of various types of auditors:

External Auditors – External auditors are also called independent auditors or Certified Public Accountants (CPAs). They audit financial statements for private companies, partnerships, and individual companies.

Internal Auditors – Internal auditors is also called Chief Audit Executives (CAEs). These are the employees of individual companies, partnerships, & government agencies & their work is to audit financial statements in their own companies.

Government Auditors – Government auditors are the employees of federal, state, & local government agencies. The main job of a government auditor is to audit fraud in the agencies.

Forensic Auditors – Forensic auditors are employees of corporation, public accounting firms, and investigative service firms. The main job of a forensic auditor is to investigate fraud and white-collar crime.