Audit Quality and Strategies - PDF
Added on 2021-05-30
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Auditing1
Abstract The audit has become one of the most import tent methods of examination of books of accountunits and financial statements of a company. This report will be focused on the quality of auditthat is conducted by an auditor and the factors that can affect such quality. The two influencingfactors that are discussed in this report are auditor’s independence and audit expectation gap.This report will discuss how these two factors can influence audit quality and strategies throughwhich these can be avoided . 2
Introduction Auditing can be defined as the function of inspection and identification of financial statementsand books of accounts of a company. This function can be performed by the internalmanagement of a company or an outside auditor can be hired by the company to do so. There arecertain laws and regulations that require specified companies to get their accounts audited bystatutory auditors. The function of auditing is of vital importance for every interested stakeholderof a company. Therefore it is conducted with proper planning and execution. Auditor of thecompany is focused to check the accuracy of the information provided by the organization intheir financial accounts (Knechel and Salterio, 2016). This report is focused on some of the mostimportant functions of audit and functions performed by the auditor of a company. Three mainaspects of an audit that will be discussed in this report are audit quality, independence of auditorand audit expectation. All these aspects are very important to understand and study to perform aneffective and efficient audit plan and executing such function appropriately to achieve all auditobjectives (Messier et.al, 2015). These matters will be discussed in detail to identify their impacton auditor and the outcome of the audit engagement. 3
Quality of audit function performed by an auditor is a key that helps in making sure the accuracyof the examination process adopted to check the financial information. There are no specificdefinitions that can define audit quality. In simple words, it can be said that the audit functionsshould include professional scepticism on part of the auditor and all professional standardsshould be followed while completing such functions. Professional qualification- An auditor that is conducting the function of the audit should have aprofessional qualification to perform such function. The auditor should have the qualificationsthat are recognized by law to perform audit function (Gunny and Zhang, 2013). Skills andknowledge- In addition to professional qualification, an auditor should also have skills andknowledge that are required to perform audit function (MINUTTI‐MEZA, 2013). Experience-The level of experience should be according to nature of business for which such auditor isperforming audit function. For example, an auditor that has not performed an audit of ITcompany cannot perform such functions effectively as audit evidence in IT companies isdifferent from manufacturing companies. In such case, the quality of audit will decrease. Auditing standards- There are various professional and ethical standards that are issued byvarious accounting standards board such as ACCA, ISCA, and IFAC etc. it is important thatthese standards are properly followed while performing the function of auditing. Principals givenby these boards try to ensure that quality of auditing function is maintained (Arruñada, 2013).Panning- Audit planning is also a very important function that helps in ensuring the quality ofaudit functions. The auditor should plan the steps that he has proposed to take in performing thefunction of the audit so that he can make sure that main objective of the audit can be achieved.The main objective of an auditor is to provide an opinion on financial information provided inbooks of accounts and financial statements. Auditors have to collect information and evidence toevaluate whether the financial statement ate free from material misstatement or not. Hence it isimportant for an organization to ensure that quality of the audit is maintained so that opiniongiven by auditor is honest and correct. There are various strategies that can be adopted by theauditor to assess the quality of services given to a particular organization. Quality inspection canbe assessed with the help of examination of following key elements-4
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