While an internal audit function deals with appraisal of the internal activities through monitoring, examining and evaluating the adequacy and effectiveness of accounting and internal controls for management purposes, it may not be sufficient since the process is likely to be subjective. An external auditor is objective and comes in with more robust procedures to carry out the same appraisal, mainly for external reporting as well.
An internal auditor is answerable to management hence is more prone to manipulation to give a positive view. An external auditor is independent and his main concern is whether the financial statements are free from material misstatements.
The external auditor has sole responsibility for the audit opinion expressed and that responsibility is not reduced by an use made of internal auditing. All judgements relating to the audit of the financial statements are those of the external auditor.
- An auditor is required to state whether, in his opinion proper books of account have been kept and whether the financial statements give a true and fair view of the state of the financial affairs of the company being audited. What are the consequences, to the auditor, for giving an unqualified opinion, when he knows that there are material inaccuracies in financial statements
- In carrying out an audit, the auditor appraises the tests and the system of internal control in order to ascertain that it is capable of processing transactions or determining the quantities and values completely and accurately. The auditorfurther carries out substantive tests in an attempt to ensure that the transactions, assets and liabilities recorded in the accounting records upon which the figures in the financial statements are based, are completely and accurately recorded.Required;List and briefly explain the substantive tests the auditor would carry out to verify the values attributed to: Trade and debtors in a company‘s financial statements and trade creditors in a company‘s financial statements
- What is the form of audit opinion you would give if you concluded that the client company was experiencing going concern problems and:you have established that the financial statements give sufficient disclosure of the going concern problems? And you have established that there is no disclosure of the going concern problems in the financial statements?
- It has often been said that the auditors‘ report is the formal result of all his efforts. This being the case, it is very important that the reader well understands the meaning of the Audit Report, particularly where the auditor wishes to qualify his opinion on the financial statements. Under statutory provision, what are the main contents of the auditors‘ report?
- It has often been said that the auditors‘ report is the formal result of all his efforts. This being the case, it is very important that the reader well understands the meaning of the Audit Report, particularly where the auditor wishes to qualify his opinion on the financial statements; b) Explain how the international standards on auditing attempt to ensure that the report of the auditors is clearly understood
- Audit working papers should always be sufficiently complete and detailed to enable an auditor with no previous connection with the audit to subsequently ascertain from them what work was performed and to support the conclusions reached by the auditor Required;List four benefits that the auditor would obtain from working papers that meet the above requirements
- It has often been said that the auditors‘ report is the formal result of all his efforts. This being the case, it is very important that the reader well understands the meaning of the Audit Report, particularly where the auditor wishes to qualify his opinion on the financial statements. Describe clearly the circumstances in which an adverse opinion and a disclaimer of opinion would be appropriate and give two examples, one each, to illustrate your answer. (A full audit opinion is not required)
- During the course of an audit, the auditor attempts to obtain sufficient relevant and reliable evidence to provide the satisfaction that the financial records are completed and accurate. One of the ways that the auditor obtains satisfaction is to select representative samples of transactions and balances for detailed testing, such samples being made using either statistical of non-statistical methods. Describe three areas where the judgment will be exercised by the auditor when using statistical sampling
- Inspection and monitoring of quality control by a firm of auditors involves both in-house and external procedures. The internal procedures include the post-audit review, sometimes known as a ―cold review‖. The external procedures are sometimes known as ―external practice inspections‖ or ―peer reviews‖.Required:Write explanatory notes on the ―cold-review‖