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Audit Quality Abstract

   

Added on  2021-06-14

11 Pages2759 Words440 Views
Audit quality1

Abstract This essay is prepared to examine the important of maintaining quality in the process of auditingconducted for a business organization. In this report various aspects of audit are discusses andthis essay has also highlighted two major factors that can affect the quality of audit. There is ahigh probability that depletion in quality of audit will also have impact on business decision andother strategic decision taken by management of an organization toward development of anorganization. This essay can be divided into two parts i.e. examination of important of quality inaudit process and factors affects quality of audit. Two main factors that influence quality of auditprocess which are discussed in this essay are audit expectation gap and independence of audit. 2

Introduction Primary function of preparing financial statement and books of accounts of a company lies withmanagement of the company. But shareholders of the company cannot rely upon accuracy of thedata provided in the financial statements prepared by management. For checking accuracy ofsuch information, examination of books of accounts of the company are conducted which iscalled as audit (Rezaee et.al, 2018). There are various stakeholders in a business organizationthat possess interest in business organization through direct or indirect channels. Thesestakeholders are required to be provided with certain information in relation of financial andoperational aspect of business. These information are provided by management of a company inform of annual reports and other related documents. It is important for these stakeholders tomake sure that the information provided in these financial statements presents true and fairposition of the company in market. Here the role of quality audit comes into consideration.Hence it becomes very important for shareholders to make sure that the quality of audit is highso that proper inspection of books of accounts and true position of company can be evaluated.This report is prepared to eventuate the importance of maintaining quality in audit of financialstatements (Knechel & Salterio, 2016). This report will consider some of the factors that canhave a significant impact on quality of auditing. Auditor’s independence and audit expectationgap will be discussed in detail and their impact on quality of audit will be analyzed. 3

Main objective of an auditor is to present true and fair opinion on financial statements of acompany. This objective of audit cannot be achieved if quality of work is not maintained duringaudit process. There are some characteristics that a quality audit should possess (Messier et.al,2015). Here some of these characteristics will be discussed to evaluate what can be considered asquality audit.There are various type of standards and compliances in relation to taxation, accounting and otherlaws that an auditor and business organization should follow. These laws and regulations shouldbe properly evaluated and followed in a quality audit. Heavy penalties can be imposed on auditorand business organization if such regulation are not strictly followed. Other important factor thatcontribute to maintaining quality in audit process is training to auditor (Knechel et.al, 2012). Anauditor cannot be considered as an expert for every type of business organization. Therefore it isimportant that auditor of the company should undergo basic training is a different field ofbusiness is required to be audited. Basic knowledge of such business area will help auditor inproviding quality services during the process of audit. There are various ethical and professional standards that are applicable on an auditor which helpsauditor in providing audit process with professionalism. Hence is it important for an auditor tofollow there rules and this will also help in providing quality audit services to businessorganization. In addition to this professional diligence an auditor should also use their commonsense while discharging its duties in process of audit. Usually audit is conducted with the help ofa team which includes qualified auditors and training staff (Christensen et.al, 2016). Henceteamwork and supervision of trainees is also required in conducting audit. There is a chance thatquality of audit work may get affected if work done by trainee is not properly supervised byqualified auditor as such trainee might not have much experience. Hence it is important to showscharacteristics such as leadership, communication, supervision, teamwork to provided services ofquality audit. Presenting audit report and other financial information in simple and understandable format isalso one of the important characteristic of quality audit. Whole process of audit will be of no useis the conclusion and problems in the company are not properly communicated to theshareholders and management (Gul et.al, 2013). 4

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