Internal Controls Concept of Auditing

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Assessment 3[Type the document subtitle]Student Name:Student ID:Course Name:Course ID:Faculty Name:University Name:
Answer 1: Internal ControlsConcept of auditing traditionally has evolved. It has evolved from auditing to audit andassurance. Traditionally auditing involved vouching, sample tests and compliances. But nowthe scope of audit has extended to assurance. It implies assuring the clients that the Internalcontrols are in order (Shaub, 1995). Internal controls have direct co-relation with theorganization’s operational effectiveness, reliability in financial reporting, compliances withall applicable statutory laws & regulations and policies laid down by management. A veryinteresting update in the field of auditing has emerged in the form of reporting the InternalFinancial Controls over and above Financial Reporting. These are guided by the Institutegoverning the Chartered accountancy course. This scope of enhancement has increased morereliability to the stakeholders and revenue authorities about the financial statements andreporting requirements. Lists of checkpoints have been recommended by the governingbodies which cover all the ins and outs of the organization irrespective of the industrydomain.There are 4 basic components of internal control1.Operational effectiveness: Auditor must ensure that the operations are carried outeffectively in the way it is expected. Revenue leakages and over / under absorption ofoverheads are controlled and closely monitored. The budgets laid out by themanagement are rational enough to be followed by the Company2.Reliability in financial reporting: there should not be irregularity in usage ofaccounting heads, significant accounting policies and the same should be followedconsistently without deviation. If the same requires deviation, it should be approvedby the top management (Doyle et al, 2007). General assurance should be provided forthe financial reporting discipline.
3.Compliances with laws and regulations and management’s policies: It should bemeticulously monitored by the auditor that the legal payment deadlines are met by thecompanies or not. In case of any delay or omission to that extent, whether thecompany has compensated the Revenue department or not forms important part of theInternal Control assurance4.Information system: How accurate the Management Information System is a vitalcriteria to decide about the execution of the particular policy. The reporting onInformation system and Information asset form a significant part of the Audit report.5.Safeguarding the fixed assets: Fixed assets are those which are for the future benefitof the organization. The auditor must ensure whether the same are safeguarded or not.Whether the replacement costs are charged to revenue or not.Answer 2:A.Reconciliation means justification of difference. Its only reconciliation which helps ineliminating differences (Stein, 1991). Bank reconciliation is done with respect toBank statements and Bank register maintained by the company as on a particular date(normally last day of financial / periodic reporting). Bank reconciliation is a controlmeasure to check the accuracy and adequacy of banking transactions of theorganization.Reconciliation operates with a basic fundamental.Do what the other has done, andundo what the other has not done.
B.Balance as per Bank RegisterBalance as per Bank StatementLess: Cheques presented butnot credited in bankAdd: Cheques issued but notdebited in bankto bank, payment advice notreceivedby bank, Paymentconfirmation pendingAnswer 3A.Information users could be all stakeholders/shareholders, Suppliers, Customers,Contractors, Revenue department, Management.B.The work in an organization is basically divided into 3 types of management. Toplevel, Mid-level and Bottom level.a.Score keeping or book keeping is normally responsibility of the bottom levelmanagement. Transactions processing system is the part of such management(Carruthers and Espeland, 1991). The responsibility area is of the Bottom levelor the supervisory level managementb.Attention directing are the mid-level managers who get access to alltransaction based reporting data from amongst all departments. The mid-levelmanagement provides attention to the loopholes in the course of preparation ofsuch individual transaction based systemc.Problem solving is in the hands of Top level management. The problemremaining unsolved is the ultimate responsibility of the top management.C.Disagree. In fact a Chartered Accountant is must to be a part of the Board. Theperformance of the Company has a lot to do with the actual reporting and accounting.The work actually done needs to be justified. The same is the task of a Charteredaccountant to produce the work actually done
Answer 41.I will try to know more about the investment and shall try to understand the feasibilityof the same in my own exploration unit. For acquiring this type of information I willgive a positive feedback to the new geologist.2.I will not share details of the financial performance. I can casually talk about abrighter future if any. If there is no bright future, I shall not utter a single word aboutthe same3.Provisions for expenses are about the anticipation. If it affects the performancesubstantially, I shall not provide for the same. With a strong balance sheet, I will beable to secure funds from Bank and utilize the same to pay back the anticipatedexpenses and prosper4.Research the tax laws and adhere to the same considering that the same is not donewith the help of a legal advisor who charges hefty amount of feesAnswer 51.Profit: $560 million2.EPS: 25.4. Earnings per share is Total Earnings before Equity Share holderappropriations / Total number of shares issued to them. Earnings are after dividend /interest distribution to Preference share holders3.Todd Sampson was appointed to the Qantas Board in February 2015. He is a Memberof the Remuneration Committee. He has been the National CEO of the Leo BurnettGroup since 2008 and also sits on the board of Fairfax Media Limited. Mr Sampsonhas close to 20 years’ experience across marketing, communication, new media anddigital transformation. He has held senior leadership and strategy roles for a number
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