Audit, Assurance and Services

Audit, Assurance and
Services

INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
QUESTION 1..................................................................................................................................2
(a). Write a letter to Nayan explaining the concept of reasonable assurance..............................2
(b). Explain in the letter to Nayan the concept of 'professional scepticism’...............................3
QUESTION 2..................................................................................................................................3
(a). Explain the ethical problem and why it is a problem............................................................3
(b) What can be done about it......................................................................................................4
QUESTION 3..................................................................................................................................4
(a). Explain why determination of materiality is a matter of auditor judgment..........................4
(b). Explain whether the information provided impacts on the auditor's assessment of
preliminary materiality................................................................................................................4
QUESTION 4..................................................................................................................................5
(a). Explain the auditor's responsibilities for 'going concern assumptions..................................5
(b). Identify any significant events or conditions........................................................................6
QUESTION 5..................................................................................................................................7
(a). Justify the events and accounting treatment..........................................................................7
QUESTION 6..................................................................................................................................8
(a). Identify the type of audit opinion that should be issued and justify your response..............8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
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INTRODUCTION
The audit is a form of assurance practices. Assurance services can be legislative or
complying-based (Bik and Hooghiemstra, 2018). They work hard to ensure that a corporation or
entity meets standards, rules and policies, and to have both internal and external trust in financial
reports. The auditors would need an analysis and interpretation of the company's performance
and will need to acknowledge external factors that could have impacted any enterprise during the
accounting periods. This assessment covers several topics which are all about the audit and
auditors, and how they perform in an organization related to each event. Aim of this report is to
ensure that financial records are true and fair; in addition all the activities should be performed
under the compliances of law and standards.
MAIN BODY
QUESTION 1
(a). Write a letter to Nayan explaining the concept of reasonable assurance
To: Nayan
Subject: Explaining the concept of reasonable assurance
Dear Nayan,
I hope you doing well and in good health. I am enjoying my new job and the work culture of this
organization is very good. I just wanted to explain you that why reasonable assurance required.
It requires for better understanding that there is still a potential probability of not eliminating or
finding material defects on a periodic basis. If not full confidence, equal certainty is nevertheless
a strong level of certainty. There is a disparity between the NGA (National Governors
Association) criteria and performance level of an auditor. Fair authentication is done by audit,
not by absolute assurance.
The audit strengthens the authenticity and credibility of the information used in the financial
report, but it does not guarantee that the financial report doesn't really fail or it is free of errors or
fraud. This is also due to the purpose of financial statements (Calderón, Piñero and Redín, 2018).
Decisions on financial accounting and the choice and implementation of different types of
reporting are required. In the sense of organisational profit, there is usually no 'right' response.
Auditor doesn't always verify that phase of acquisition of company is 'correct,' but rather offers
proof of the appropriateness of method and implementation of the income statement
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and significant reports. The purpose of assessment process is just another reason that the
assurance is not absolute. The auditors seem unable to determine any expenditure and transaction
history, and they are using sorting. It is hard to obtain reliable information on some financial
statements and auditors have a limited period of time to carry out the audit.
(b). Explain in the letter to Nayan the concept of 'professional scepticism’
To: Nayan
Subject: Explaining the concept of professional scepticism
Dear Nayan,
I hope you understand the importance of reasonable assurance and in this letter I want to disuses
about professional scepticism. It is a practise that requires an elevated danger, warnings to
situations that may indicate possible error or deception and a thorough assessment of the audit
evidence. These indicators of professional scepticism demonstrate the concerns posed by the
manager and allow internal audit to respond to these issues. The auditor requires professional
scepticism. It is the mentality that accountant wants to remain separate from the client and his
staff. The auditor seems to have an elevated risk and investigates thoroughly all the evidence
presented by their business. This does not mean that they find the client to be a cheat, but rather
that they must do anything other than accept the client's opinion about something. Paperwork
supporting the client's claims (e.g. copies of contracts, policy records, etc.) may typically be
verified. Information collected from impartial third parties is usually found to be more accurate
than that received from the user. Supervisors will not actually attempt to deceive auditors, but
audit team should take responsibility for collecting evidence to prove the arguments to managers.
The auditor should be aware of the possibility that some managers could also attempt to deceive
inspectors.
QUESTION 2
(a). Explain the ethical problem and why it is a problem
According to the case, circumstance or actions creates a conflict with fundamental values
of a society and ethical issues arise (Channuntapipat, Samsonova and Turley, 2019). These
conflicts can influence both individuals and organisations, as all their activities can be questioned
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