Analytical Accounting Procedure

Analytical Accounting Procedure

Introduction

Audit is a basically an examination and a review of the financial statement that have been prepared by the management at the end of the financial period. The primary function of an audit is to verify the accuracy and completeness of the accounts. Audit is performed by the auditors' in order to enhance the confidence of the business stakeholders. Auditors are appointed by the audit committee which is selected by the board of directors of the company. In this paper, we will determine the unresolved issues of the audit report.

Audit is a process carried out by Auditors that ensures transparency of the financial statements and ensures that there are no lapses in the reporting or data of the reports. Auditors ensure that the financial statement are free from any error by providing the audit report after the completion of the audit which have been signed by the senior partner of the audit Auditors are not at all allowed to give an absolute assurance in the audit report due to the inherit limitations present in the financial statements. They are only allowed to give a reasonable assurance after verifying the accounting records of the company.

Discussion

In development of the confirmation procedures, the auditor decides the type of confirmation to use the time to use the procedures, the sample size and select individual items, we analyze each of these elements together with factures affecting the decision.

We use two common types of accounts receivable confirmation:

Positive confirmation: it is a communication to the debtor asking you to confirm directly if it is right or wrong balance, as is sitting on the confirmation request. There is a blank form of confirmation that is not the amount in confirmation, but requests that the recipient fill out the proportions balance or other information. It is worth mentioning that the blank confirmation proves more reliable than confirmations including confirmation.

We can also say that the positive confirmation is more reliable. There is evidence that the auditor develops procedures for monitoring if not received a response from the debtor. Negative Confirmation: also goes to the debtor, but requests a response only when the debtor disagrees with the amount quoted.

In this confirmation we found that the lack of response should be taken as a correct answer, even if the debtor has ignored the request for confirmation. The only negative acknowledgments are used when they are present in all of the following circumstances.

Accounts receivable are composed of a large number of small accounts. Assessed control risk and inherent risk, combined, are low. It is unlikely that a combined risk is low, the internal control structure is ineffective or there is a high expectation of errors. For example, if the audits of previous years indicate that there is often accounts receivable to be clarified or wrong, negative confirmations would be inappropriate.

There is no reason to believe that recipients of confirmations will probably not take them into account. It is common to use a combination of positive and ...