Micro and Macro Economic Factors in Audit Report
Added on 2020-02-24
9 Pages2103 Words108 Views
By student name ProfessorUniversityDate: 28 August 2017.
1ContentsQuestion no 1..............................................................................2Question no 2..............................................................................6Question no 3..............................................................................7Refrences....................................................................................81 | P a g e
2Question no 1Audit is an independent examination of the books of accounts of an entity conducted by theauditors with the view to express an opinion on the financial statements whether they are prepared onan unbiased and true basis and whether they can be relied upon to take the critical and significantbusiness and financial statements. It gives reasonable assurance to the users of the financial statements,both internal and external, including government, shareholders, banks, financial institutions, creditors,etc. to help them take decision on their investments. The regulation on audit on the entities hasincreased over time by ACCA and other regulatory bodies. There has been many guidance’s being issuedby the IFRS committee for recording the transaction and maintenance of the books which needs to beverified by the auditors while conducting the audit of the entity. The requirements of audit do not endhere and audited report is required in the stock exchanges in which the company’s shares are listed. Toconduct an audit, the auditor 1st needs to understand the business and it environment, the industry inwhich it is operating, the government regulation, other economic and political factor, if any, affectingthe business and several other micro and macro economic factors to give a proper audit report. Auditorsalso need to validate and comment upon the estimates and management judgements being taken uponin preparation of the accounts such that they are viable[ CITATION Rai16 \l 1033 ]. They also need tocheck on the materiality, going concern assumption and whether or not the basic concept of consistencyhas been followed or not. With all this objectives in mind, the auditor audits the books of accounts usingsubstantive and analytical audit procedures. Substantive audit procedures include vouching of theincomes and expenses recorded in the books falling above the materiality level for whether they actuallyexist or not, whether they have been completely recorded, reconciling the same from the supportingevidences in the form of vouchers, bills, invoices, etc. Substantive procedures are usually given effect tousing inspection of records, observation of processes and procedures being followed, taking externalconfirmations from the parties dealing with the business or company like debtors, creditors, banks, etc.,verifying the related party transactions, etc. They also check the arithmetical accuracy in some cases tocheck whether this has been taken care of or not. Besides all this, a check is also made on the assets andliabilities recorded in the books for their actual existence and reporting to check substance overform[ CITATION Kne16 \l 1033 ].Once all this is given effect to and still the auditor is not able to express his / her opinion, thenhe/she resorts to the analytical audit procedures, which include ratio analysis of certain specific ratios,comparison of the actual from the budgeted and expected figures, trend analysis with respect to the2 | P a g e
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
LUBS3550 - Introduction To Audit | Assignmentlg...
|10
|2392
|109
HI6026 - Audit, Assurance and Compliancelg...
|9
|2190
|47
Annual Reports on Paying Corporate Taxeslg...
|10
|2397
|52
International Financial Accounting Standard and Regulationslg...
|11
|2486
|87
HI6026 - Aspects and Methods of Auditing - Assignmentlg...
|9
|2047
|65
HI6026 - Audit, Assurance and Compliance | Reportlg...
|12
|2249
|88