Audit Process

Audit Process

Introduction

Audits in business are very important, because without practice management of an audit does not have full assurance that recorded economic data really are true and reliable. Defining the audit is quite reasonable, the actual situation of the company. An audit also assesses the efficiency and effectiveness with which the practical administrative tasks and the degree of compliance with plans and management guidelines. It is 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 (Maher, 2008).

Discussion

Need

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 (Monhemius, 2009). The internal auditing can and should help to manage risks. It can eliminate the complexities and redundancies that exist about the controls and reduce costs, which will improve competitiveness and protect the value of the company to its shareholders.

Roles and Responsibilities of an External Auditor

The significance of the role played by the external auditor has increased in this globalized modern era where everything is standardized. External auditors have an important role in achieving the objectives of the organization's financial information. They provide an independent viewpoint and purpose (Hess, 2001). The external auditor performs an opinion on the reliability of financial statements. When auditing the auditors provide useful information to management regarding internal control:

A.Communicating audit findings, the results of analytical review and recommendations.

B.Communicating internal control deficiencies identified during the course of the audit.

The fundamental role of an external auditor is to record a sample of evidence to confirm the validity and suitability of an organization's data and to “independently” assess an organization's internal control procedures (Regan, 2003). The audit report compares planned conformance to actual conformance and provides a mechanism for continuous improvement.

Need in financial activities

It is common for financial institutions when they borrow money, ask the applicant company, the audited financial statements, i.e., to be endorsed with the signature of a CPA (Certified public Accountant). An audit can assess, for example, the financial statements as a whole or a part thereof, the proper use of human resources, the use of materials and equipment and distribution, contributing to the management for proper decision-making (Chen, 2006).

Financial reporting and disclosure of management's private information are controversial aspects of an organization that cannot be overlooked by any means.

Indicators of need for an Audit

Results ...