Auditing: Need for External Audit, Stewardship, KPIs and Ratio Analysis of Funtastic Limited

Running Head: AUDITING
AUDITING
Name of the Student
Name of the University
Author note

1AUDITING
Executive Summary:
Auditing is one of the most important function which must be initiated by every kind
of business organisation. The importance of auditing in business organisation has
increased due to the rising number of financial scandals and crimes. With this in
mind, the present report has been prepared to present the need for an external audit,
principles of stewardship and common good, key performance indicators for sales,
ratio analysis has been presented for one of Australia’s famous toy maker Funtastic
Limited.

2AUDITING
Introduction:
Auditing of the financial statements refers to the close examination of a
business entity’s financial records. It can be carried out by an efficient and
recognised external independent auditor, which is able to accurately judge the
fairness of these financial statements. It is important for ensuring the accountability
towards the different stakeholders of the business entities. The tax institutions,
different financial institutions, government agencies and the management of the
company require proper auditing of the financial statements in order to ensure
reliability of the company’s operations and financial statements. This report expects
to investigate the need for independent auditing, conforming to the guidelines of
common good and stewardship, Key performing indicators and ratio analysis of
Funtastic Limited of Australia.
Discussion:
Need for independent external audit:
Credibility: Financial statements become much more credible, when it is audited by
any external auditor. In this age of increasing biasness by internal auditors, it is
necessary for auditing by external auditors (Alleyne, Hudaib and Pike 2013.).
Re-verification: It is better to re-verify the financial statements by the external
auditors, in order to ensure the accuracy and impartiality of the reports. It also helps
to ensuring that the reports remain error free (Gerber et al., 2014).
Fraud detection: External auditors examines each and every aspect of the
bookkeeping records till the final preparation of the financial statements along with
the way of auditing of the internal audits. This helps in fraud detection. In such