Audit and Assurance

Audit and Assurance

Contents
Audit and Assurance....................................................................................................................................1
Question 1...................................................................................................................................................3
Question 2...................................................................................................................................................5
Question 3...................................................................................................................................................8
REFERENCES..............................................................................................................................................12

INTRODUCTION
The term audit is said to an examination of certain books of accounts through an auditor
with the help of physical checking of stock in orer to ensure that all functional units follows
documented system concerned with recording transactions. Similarly, assurance is described as
financial coverage which provides remuneration for a circumstance which is certain to occur.
The report of audit and assurance covers examples that are relevant to credibility of an auditor
and concept of objectivity. It also covers threats and safeguards which can be implemented in
some situations.
MAIN BODY
Question 1
(a)
Audit integrity relates to the capacity of the independent auditors to conduct with fairness and
objectivity during his/her auditing activities. Public views on audit honesty rely more on their
understanding of external auditors than on legitimate autonomy.
Often included are:
1) Committee of the Audit:
The auditor shall consist of a defined number of members of the company's board of directors
whose main responsibilities are to help auditors remain independent of government, i.e. the panel
must optimal balance in several audit disputes rather than supervise them (Denisov,
Khachaturyan and Umnova, 2018).
2) Size of audit firm
The size of the audit firm is a vital aspect that reflects the auditor's independence. An auditor's
reputation is directly related to audit performance. As larger audit firms tend to have better
analytical facilities more efficient accounting resources, more advanced technology and more
skilled personnel that will be able to execute major company audits relative to smaller auditors,
audit firms will guarantee that they provide unbiased audit quality services. Large audit firms
have higher business consultants that allow them to satisfy management requirements, while
smaller companies offer tailored services because their consumer portfolios are lower and they
may be able to meet management requirements.

3) Competitiveness degree in the audit service sector
Competition has been described as an external force that affects auditors' autonomy. As the
consumer can access services from another auditor easily, many companies that compete in a
fiercely competitive world can fail to remain independent (Kend and Basioudis, 2018).
4) Tenure of audit firm that meets the interests of a particular client
The concept of audit firm refers to the amount of time taken to satisfy a given client's audit
criteria. In directly connecting the company with the interests of its clients, a long association
with a business and accounting firm is likely to arise, rendering it difficult for the internal audit
to take independent measures.
5) Auditing size and non-audit fees:
IFAC Codes of Ethics indicate that the scale of the customer measured by the volume of the fee
may cast some doubt about audit credibility. "The (overall) fee for customer must not exceed the
certain fraction of the global audit turnover, EFAA states clearly," The accountants did tend to
have been in collusion with management teams in trying to cover unlawful practices in situations
of accountability controversies (such as the Enron and WorldCom). The major reserve function
has been the money received from consumers by the accountants for non-audit charges.
(b).
(I) There is indeed a lack of discretion, such as the audit manager owning shares of the business
firm in this situation, which may influence the judgment of the auditor.
(ii) This situation is arbitrary in nature, but the customer is a significant source of revenue for the
auditor and the total benefit is 700,000, of which 100,000 will be obtained from the customer.
(iii) In this situation, there is also a shortage of external auditors, as the accountant has taken out
a loan from the same institution in which she is an auditor.
(iv) In the situation at hand, there is no question of the auditor's judgment, because the auditor is
asked to provide recommendations, so this is not an audit commitment, because there is no
necessity to validate the auditor's credibility and freedom.