AUDITING

Auditing



Auditing

Question 1

An audit report is completed by a certified public accountant (CPA) once the audit of the financial statements and internal controls of a company is complete. Modifications to the unqualified opinion are the adverse opinion, disclaimer of opinion and qualified opinion (King, 2002). Accountants use audit reports to publish the data they collect during their fieldwork of a company or organization. Once testing is complete, and all control issues are documented, writing the internal audit report should be a straightforward process. Each internal audit department will develop its own report format and writing style, but the types of information these reports contain are the same from business to business (Kirk, 2009).

Shareholders use audit report to see how the company is progressing and the money they have invested is properly utilised and they getting properly calculated dividend according to the profits and revenues earned by the company etc.

Publicly traded companies and other businesses with investors concerned about the performance and going concern of the company are required to provide an audit report available to their shareholders. The shareholders are the investor and owner of the company, and they need audit report to know about the going concern status of the company (Millichamp, 2002).

The shareholder can get following information about the company by using audit report:

Gain a well-built sense of internal controls.

Recognize important area(s) for improvements in the organization.

Appraise quality, threats, efficacy and economy.

Identify fraudulent occurrences in the company.

Understand and analyse the company's financial data.

To save shareholder from being trapped.

Know going concern of the company.

Nearly all companies that produce an annual report to shareholders are required to be audited by an independent accounting firm. Even if, this is not required, companies routinely perform an annual audit for transparency to shareholders and other stakeholders. Companies usually like to include the report of the auditor certifying the financial results. The inclusion of these certifications by both the auditors and the company's management became monumentally more important following the passage of the Sarbanes-Oxley Act of 2002 (King, 2002). These laws were passed in reaction to numerous of the main company accounting dishonors that impacted investors, including the well-publicized collapse of Enron, and required executives to certify that they had reviewed the financial statements and auditors to attest to their independent auditor status.

Question 2

Through-out the audit, the auditors ought to talk about matters with the client as desirable to attain a complete understanding ...