Auditing: Importance, Procedures, and Weaknesses

Auditing
Tutorials

INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
QUESTION 1..................................................................................................................................2
(a). Explain what is meant by sufficient appropriate audit evidence...........................................2
(b). Explain whether sufficient appropriate audit evidence has been obtained for each of the
above situations...........................................................................................................................2
QUESTION 2..................................................................................................................................3
(a). Provide four possible explanations for the results of the various ratios................................3
QUESTION 3..................................................................................................................................3
(a). Describe five internal control weaknesses in Everyday Supplies’ internal control..............3
(b). Explain weaknesses and why they are weakness of internal control....................................5
QUESTION 4..................................................................................................................................5
(a). Determine whether John has arrived at the appropriate conclusion or not...........................5
(b). Justify your answer by addressing the following areas.........................................................5
QUESTION 5..................................................................................................................................6
(a). Identify a procedure(s) you could use to audit Sun Construction's revenue.........................6
QUESTION 6..................................................................................................................................6
(a). Draft the note on following features of internal and external auditors.................................6
CONCLUSION................................................................................................................................8
1

INTRODUCTION
Auditing is the review or examination of the different financial accounts by an inspector
accompanied by a physical stock monitoring to ensure that all divisions follow a recorded
method of keeping records (Axén, 2018). This shall be done to determine the quality of the
financial statements issued by the organisation. All publicly traded companies must have their
reports audited by an independent auditor until they announce their performance for every
quarter of the year. This assessment covers the several types of questions which are based on
auditing and it further helps the organization to identify accurate results. In addition, internal or
external auditing are required and they have different roles and responsibilities.
MAIN BODY
QUESTION 1
(a). Explain what is meant by sufficient appropriate audit evidence
Sufficient appropriate audit evidences is a measure of the quantity of evidence from its
audit (Gepp and et.al., 2018). The sum of audit supporting evidence is determined by the
auditor's assessment of the risk of misstatement (the higher the risk found, more and more audit
report is likely to be needed) but also from the output of such audit proof (the better the amount,
the smaller the necessity). Adequacy is an indication of the quality of the audit proof; that is
why, its reliability and validity in endorsing the conclusions on which the judgement of the
auditor is cantered.
The audit evidence is necessary if the auditor is to receive it all in the course of his audit
procedure. The main aim of every audit is to determine the compliance of the organisation's
financial report with the intervention of the applicant for GAAP accounting with the
management team of the company.
(b). Explain whether sufficient appropriate audit evidence has been obtained for each of the
above situations
In the above two addressed cases, sufficient and appropriate audit proof was found in the second
example, out of the 20 test count auditors, two minor differences of one item each were found to
be immaterial. Even during physical inspection, the auditor discovered that the client had found
five minor differences among the perpetual records and the actual sum at hand. Neither of these
2