Audit and Assurance Report - Importance of Auditing and Assurance

AUDIT AND ASSURANCE
REPORT

Table of Contents
INTRODUCTION......................................................................................................................... 3
QUESTION 1................................................................................................................................ 3
(a)............................................................................................................................................... 3
(b).............................................................................................................................................. 4
(c)............................................................................................................................................... 5
QUESTION 2................................................................................................................................ 7
(a)............................................................................................................................................... 7
(b).............................................................................................................................................. 7
(c)............................................................................................................................................... 8
(d).............................................................................................................................................. 8
QUESTION 3................................................................................................................................ 9
(a)............................................................................................................................................... 9
(b).............................................................................................................................................. 9
(c)............................................................................................................................................. 10
(d)............................................................................................................................................ 11
(e)............................................................................................................................................. 11
CONCLUSION............................................................................................................................12
REFERENCES.............................................................................................................................. 1

INTRODUCTION
Auditing is basically an official inspection of an individuals as well as organization by an
independent body or auditors. The report will discuss the important aspects and concepts of
auditing and assurance. The report will also cover the independence of auditor, objectivity of
auditing and many more. Lastly, the report will state the audit risk, audit strategy and the
difference between the interim and final audit along with the advantage of interim audit.
QUESTION 1
Auditors independence is very important principle that promotes the credibility of the
auditors which state that they will provide correct opinion on financial statements of the
company.
(a)
Credibility of Auditors:
Other than independence example, the factors or example which defines the credibility of
the auditors are as follows:
 The company have to confirm that, such auditors does not provide any consulting service to
company.
 They also need to confirm that, the auditor should not be the part (owner or manager) of the
auditing firm from which company has taken any consulting service.
 The auditor have to explicitly stated that they will not provide any consultancy and taxation
service during whole audit process.
 The company also need to confirm that the auditor are subject to any corrective action or not
as ordered by accreditation agency (Louwers and et.al., 2018).
 The audit decision was taken by independent auditor or individual conducted site analysis
for the audit.
 Lastly, the reputation of the auditor with the other firms and groups are also a matter
relevant in relation to credibility.
Steps has taken or might taken by accounting profession in relation to credibility of
auditors:

As per the International Standards of Auditing (UK), the steps that need to taken by the
auditor or accounting profession in order to proof their credibility is:
The accounting profession need to provide written letter disclosing all the relationship between
the audit firm and the company to the Audit Committee. Then, the audit committee consider the
relationship between the service provider and with the auditor is not create mutual and conflict
interest (Coram and et.al., 2021).
(b)
Disqualification under section 345 of the Companies Act 2006:
The recognized supervisory body of UK name The Institute of Chartered Accountants in
England and Wales (ICAEW) and ACCA has stated the list of situation and principles where an
auditor can not be considered as independent.
i)
As per the section 345 and ACCA code, the audit partner holding 1% shares of the
company can not allowable to appoint as an auditor of the company. It is because the company
can influence them to make impartial opinion. In the given question, the audit manager holds the
shares of 1000 shares that is 1% of the total shares in the Andrew (Earley and et.al., 2017). Thus,
the audit manager are disqualified from the position of independent auditor of the Andrew Co. It
is because this affects the objectivity.
ii)
The audit individual or firm can not be qualified as an independent auditor of the
company if they have any amount due from that company. It is because it may affects the
opinion of the auditors that they will give after analyzing the financial reports of the company.
As per section 345 and ACCA codes of ethics, their is no prescribed limit is specified except
15% for the public interest clients. Here, in the given question as the audit firm have total
amount of audit fee receivable from the company is £100000 i.e.,14.3% of the total fees
percentage. Janet company has 14.3% of fees receivables which does not crosses the 15% but
this scenario need to be under constant review (DRAFT, 2019).
iii)
The disqualification of auditor under section 345 of the companies act 2006 also state the
situation that if the individual, its relative or audit partner is indebted to the company, its