Auditing in Context

This report discusses the importance of auditing in ensuring compliance with regulations and achieving strategic objectives. It focuses on Next Plc, a British international clothes, shoes, and household products store, and the five principles of UK Corporate Governance Code. The report also discusses the role of external audits in improving an organization's systems and procedures, giving credibility, and providing shareholders with confidence.

Auditing in Context

Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
Five parts to UK Corporate Governance Code............................................................................3
PART B...........................................................................................................................................5
Discuss the role played by external audits in helping companies like Next Plc to achieve their
strategic objectives.......................................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Auditing is described as the on-site verifying operation of a procedure or effective operation,
including such observation or evaluation, to guarantee compliance with regulations. An audit
might cover the entire company or focus on a single department, procedure, or manufacturing
step. Many audits have government duties, like assessing documentation, risk, or productivity, or
checking up on mitigation action that have been done (Bauer, Humphreys and Trotman, 2021).
This report based on the Next plc, headquartered in Enderby, England, is a British international
clothes, shoes, and household products store. It has over 700 stores, with approximately 500 in
the United Kingdom and approximately 200 throughout Europe, Asia, and the Mideast. Next is
the largest clothes retailer in the UK in terms of sales.
PART A
Five parts to UK Corporate Governance Code
Corporate governance is important in great times and critical in bad ones. First and
importantly, our management team has fought tirelessly to protect our workers' and clients'
workplace safety. Following constructive feedback, they made the painful choice to temporally
shut our factories in April 2020 for two weeks in attempt to truly the processes to be COVID-
safe. While resuming, coworkers and our registered organization, USDAW, were contacted. For
a period, the amount of weekly online purchases was restricted to guarantee that the procedures
could be completed properly, and we emphasized the things that our clients most required,
including such children's clothing. These are mentioned five principles of NEXT plc such as:
Disclosures and Transparency: Businesses should provide timely and appropriate statements
on financial results, administration, and control. It describes standards, the audit procedure, and
the Categories 1–6 grading system prior to an audit taking place. The primary goal is to promote
effective management information forthrightness. By allowing company actually to disclose us
their real data instead of what they believe we like seeing, we were able to identify a lot of
notable concerns. This audit strategy emphasizes the fundamental rights of the employees in our
distribution chain and is threat, taking into consideration the company's geographical position,
moral reputation, production method, and most current inspection grade (Leaver and et.al, 2020).

Right of shareholder: The Board considered a variety of prospective purchases and
developments with the goal of improving the Current customer proposition. The Board used
stringent financial standards to evaluate such options. They gave approval to a number of
initiatives, which are detailed in the Chief Executive's Report.
Equitable treatment of shareholders: All investors, especially early investors, people, and
international stockholders, should be considered equal (fairly). Whenever a company's rights are
violated, but when a single owner or a limited partner is mistreated by the remainder, investors
should be able to seek restitution. The Business's primary goal is to acquire and trade high-
quality apparel and home goods in order to increase profits for its owners. We intend to do it
responsibly and in the best interests of our workers, consumers, vendors, and other partners. The
manner we performed our commitments this year is detailed in our Corporate Social
responsibility Reports (Terblanche and De Clercq, 2020).
Board of directors: To ensure that the firm achieves its goals, the board of directors should
establish the plan of action and supervise administration. The board's responsibility to the firm
and its membership should be supported by a corporate governance structure. The addition of
Tom Hall to the Board in July 2020 bolstered the Board's independence. Tom has operated in the
apparel retail industry for a variety of companies, including value, premium, and internet. As a
result, he is acutely aware of the significant, technical, and administrative problems and
possibilities posed by quickly changing behavior of customers. Tom formerly served on the
boards of Ascential plc in 2016 and Auto Trader Group plc until 2016, following the company's
best IPO in 2015.
Stakeholders: The corporate governance structure should acknowledge participants' legal rights
and make it easier for them to collaborate in order to build income, jobs, and long-term
businesses. It takes a deal of time and resources to provide thorough and accurate information to
investors, as well as to keep in touch with them on a frequent and effective basis. Rather than
delegating investment management to a staff, Lord Wolfson and Amanda James, as CEO and
Group Financial Officer, correspondingly, communicate with shareholders on a frequent basis
year round. The entire year and other official statements are given in a consistent manner, with
the goal of making them as relevant, intelligible, accessible, and comparative as feasible.

PART B
Discuss the role played by external audits in helping companies like Next Plc to achieve their
strategic objectives
An audit is crucial because it offers a series of accounting reports legitimacy and provides
investors trust that the accounting are honest and fair. It can also aid in the improvement of an
organization's systems and procedures. Apart from the regulatory obligations for a statutory
audit, the auditing process itself produces critical and vital information. An audit examines if a
company is delivering an accurate and fair picture of its financial results and status, which is
something every company strives for. The Committee conducted five planned meeting
throughout the year. Some of this year's meetings were addressed by request only by the Group
Finance Director and Chairman (Uwhejevwe-Togbolo, Esenohor and Erume, 2020). The
Committee meets on a constant schedule without presence of structural, and discusses
individually with every Head of Human Resources and the independent auditors as needed and at
least once a year. Top executives and senior executives are asked to attend Committee
consultations to create a strong risk - aware culture and to maintain the Board informed about
current business happenings.
Inside Structure and controls are improved by an external audit: Auditors will obtain an
awareness of the company's broader technology and procedures ecosystem, not simply the
figures. This will allow them to spot flaws in financial accounting or processes and take
measures to improve company's efficiency and reduce the risk of fraudulent activity.
Creditability is given by external audit: Getting financial accounts audited by an outside auditor
will help to gain more reputation in the commercial world than it would be if they don't. They
need to obtain capital or sell type of company. Offering audit reports ensures that about
accounting is free of significant error or misconduct, increasing chances of meeting objectives.
Shareholders get confidence from an external audit: Numerous businesses are managed by a
limited management board acting in the interests of investors who may be geographically
dispersed and have limited influence during day activities. An objective audit of the banking
statements can also provide investors confidence that the firm is being operated in their greatest

advantage while also highlighting any difficulties that may not have been raised to their
awareness (Fischer, Jaidka and Lelkes, 2020).
For example: Currently in the planning phases, evaluating decides to pursue and addressing
audit strategy, auditor independence, charges, significant accounting, audit results, and control
activities with PwC. Examining comments from all concerned parties in the exterior auditing,
such as PwC's report on one's own internal performance processes, the results of NEXT
Company’s questionnaire on their knowledge with the independent auditors in regions such like
audit strategy, independence and objectivity, technological resilience, information exchange and
making plans, and elevated responses from the Review panel itself.
The Audit Committee examined and implemented the recommendations published by the
Financial Action Task force and other covered entities on a regular basis year round. As a result,
the Committee's study has been narrowed to a wide variety of topics.
• Frequent updates on the NEXT Finance purchasing practices, covering FCA conformity,
information on client indicated the extent, and disaster response plans available to our consumers
starting in March 2020.
• An examination of warehouse management, covering functional and health and safety
adjustments brought on by the COVID epidemic.
• An updated on the company's efforts to protect the well-being of its employees and customers.
• The broader IT issues raised by home employment arrangements, such as GDPR and cyber
security threats (Herman, 2020).
· Examine all important judgments and assumptions made by the organization in the financial
reporting. In view of the major risks, the broader market situation in which the firm works, with
the need to guarantee that the financial statements are honest, reasonable, and clear, the Council
has questioned these judgments.
CONCLUSION
As per the above report it has been concluded that An external audit is a review undertaken
by a non-affiliated accountant. This sort of audits is most typically used to get verification of an

organization's financial statements. Some banks and investors, as well as all clearly and openly
enterprises, demand this accreditation.

REFERENCES
Books and Journal
Bauer, T. D., Humphreys, K. A. and Trotman, K. T., 2021. Group judgment and decision making
in auditing: Research in the time of COVID-19 and beyond. AUDITING: A Journal of
Practice & Theory.
Leaver, A. and et.al, 2020. Auditing with accountability: shrinking the opportunity spaces for
audit failure.
Terblanche, E. A. J. and De Clercq, B., 2020. Factors to consider for effective critical thinking
development in auditing students. South African Journal of Accounting Research. 34(2).
pp.96-114.
Uwhejevwe-Togbolo, S. E., Esenohor, T. E. and Erume, F. O., 2020. Theories in Auditing of
Social Accounting, Service Organization and Financial Institutions. Vocational and
Technical Education Journal. 2(1).
Fischer, S., Jaidka, K. and Lelkes, Y., 2020. Auditing local news presence on Google
News. Nature Human Behaviour. 4(12). pp.1236-1244.
Herman, L., 2020. Neither takers nor makers: The Big-4 auditing firms as regulatory
intermediaries. Accounting History. 25(3). pp.349-374.