Importance of Audit and Assurance Services in Modern Business Era

The provided content focuses on the importance of audit and assurance services in organizations to ensure compliance with laws and regulations, preventing risks, and providing a true financial report. The content highlights various documents and records that auditors examine during an audit, including general ledger, trail balance, payroll reports, board meetings minutes, and purchase of fixed assets. Additionally, it discusses the weaknesses that can occur in internal control procedures, such as lack of transparency, inadequate training, and poor communication. To overcome these challenges, auditing tools and techniques are crucial, which include sampling techniques, inspection methods, and evaluation processes. The conclusion emphasizes the significance of auditing and assurance services for organizations to ensure the accuracy and reliability of their financial reports.

Name:
Student Number:
Resident Campus:
Assessment Title:
Lecturer Name:
Submitted On:
Sources:

Introduction
In this assignment we are going to discuss in detail the concept of audit and its technologies and
about the assurance. Audit means the inspection of the record of an organization about its
financial or non financial transactions by a qualified team or an individual accountant. Audit is
important for an organization because if the firms do not conduct an audit then it will not be able
to produce correct financial reports for its employees and clients or for potential buyers (Joey
2014). Now if talk about assurance then it is a process or a service that is provided to firm by a
certified accountant (C L 2017). In assurance service the chartered accountant provides financial
information to the organization through which the firm makes better decisions. This information
provided by the accountant helps the firm to access the risk that are on the way of the firm and
the firm then avoid these risks by planning against them. Hence assurance is a service provided
by a certified accountant in order to let firm know what risks they might face in the coming
future.
Critical Analysis
A) This part of the assignment contains deep discussion about the audit and assurance.
Ethics play an important role whether in a business or in any other profession. Ethics
means a belief of understanding that what is wrong and what is right, ethics are the moral
standards, moral principles of a person. There is a very important role of ethics in
auditing and assurance, No single activity or profession can work without ethics. In the
business world business ethics are everything, they are the moral structure of the
organization that how the business entity will deal with its client, suppliers etc. Ethics are
put into things to make the things more transparent and genuine (Ajay 2013). When an
organization wants to conduct auditing and assurance activities, they take the services of
the certified chartered accountants, and these accountants then are required to prepare and
submit their audit or assurance report with full honesty by keeping in mind their ethics.
The ethical requirements in completing and submitting the audit and assurance report are
as following (Accountant 2017):
 Integrity: An accountant must have the basic ethic of integrity. Integrity means being
honest towards something. The certified accountant do not hide, anything whether it may
result in a loss to the organization, he must disclose all the hidden and wrongly done
transactions of the organization, so that the firm can use this information in order to make
the operation of the business successful.
 Confidentiality: This is the most important ethic that an accountant must have.
Confidentiality means keeping a secret. An accountant is a person that has all the
important and confidential financial information of a company. This information, if used

wrongly can adversely affect the public image of the organization. An accountant must
keep the confidential information of the organization safe and secure and should respect
the ethical requirement of confidentiality and must not use this information for personal
benefits.
 Objectivity: The meaning of objectivity is being impartial or unbiased. A certified
accountant must be unbiased towards the judgments. Any conflict of him with any
organization must not affect the objectivity of his auditing and assurance report.
 Professional Competence: The responsibility of an accountant is to provide continuous
financial services to his clients. It is his ethical duty to be up to date in terms of having
knowledge about any new thing in accounts.
 Professional Behavior: An accountant must always behave with his client in a
professional manner and must complies himself according to the laws and regulations
that are formed by the associations of the accountants.
Above are the ethical requirements and responsibilities that must be fulfilled before submitting
the audit and assurance report. An accountant with the understanding of all these ethical
requirements will always make sure that the client organization achieves favorable results and
the accountant will also help in assessing the risk and providing other useful information to the
client (Singhania 2009).
B) Now we will discuss about the purpose, content, format & methodologies that are
necessary to provide assurance and audit services especially in the areas of risk
assessment, audit planning, audit execution and formulations of opinions. The idea of risk
assessment in audit planning is not a new concept, it is two decades old. It is a process of
focusing on those parts of the organization that are most at risk of material misstatement.
Material misstatement refers to those statements that if entered wrong in the financial
information of the organization then it will affect the decision of the user of that financial
information (Karkol 2011). This is the reason why auditing in risk assessment is
important. An internal control system is a process in which it is ensures that the
organization is compiling up with all the laws and regulations and which keeps the
organization away from risks. If we now talk about the content that is necessary to
provide an assurance and audit service are, the general ledger, trail balance, copies of
loans, record of the purchase of fixed assets, depreciation schedule, payroll reports etc are
the content that is audited at the time of audit and assurance (Brian 2000).
 General Ledger: General ledger or in simpler words the main accounts of the company,
the organization in this advance era of technology can use various accounting information
systems that will maintain their general ledger (Investopedia 2015), the general ledger
then can be sent to the auditor, this main account will let know the auditor that how much
to audit.

 Trail Balance: A book showing all the debit and credit entries of the transactions of an
organization will be known as trail balance. Mostly it has been seen that auditors usually
likes to audit trail balances as it is an important key that shows any mismatching or fraud
or error in the financial report of the organization.
 Payroll reports: Payroll reports are those reports which are prepared to record the
amount that is paid to the employees or to the workers of the firm. An audit will inspect
these records to see if there is any liability that is not paid or wrongly recorded.
 Board meetings minutes: When an auditor conducts audit, he looks up for the board
meetings minutes as these meetings of board of directors contains information about the
financial condition of the organization (kallis 2003).
 Purchase of fixed assets: When a new fixed asset is purchased by an organization, all
the details regarding it even its invoices should be given to the auditor so that he can
include it in the financial reports. This will show a true and a right condition of the
organization’s financial stand.
A certified accountant when provides audit services consider all these content to prepare a
full fledge actual financial report of the organization. Below is a picture that will show an
informal format of an internal audit, how it works and how many stages it involves (Lotich
2017):
Above picture shows the process of internal audit, it is usually a continuous process to find out
any error activity.

C) In section C of this assignment we will discuss the weakness that could or that occurs in
internal control procedures and potential risk factors. Below are few weaknesses that
occurs in internal control procedures (Canada 2004):
 Electronic security controls: Electronic control systems if are not in adequate or proper
form then it can lead to unauthorized access by a person or any third party that might
steal or fill any discrepancies with the actual financial statement.
 Monitoring controls: Monitoring controls means the control of the senior and the middle
management over the different activities and operations of the organization. Poor
monitoring controls will let the errors occur continuously, which will result in frauds and
errors to make a room for themselves in the accounts of the organization.
 New financial systems: Many accounting firms are developing various new systems or
software of financial nature that helps the firm in recording analyzing different monetary
or non monetary transactions (Barbasor 2012). Sometimes the management is not that
much train to practice such systems properly, which results in the occurrence of errors,
which further leads to frauds and wrong recording of financial condition of the company.
 Manual control: When financial or non financial data of the organization is checked
manually, the chances of errors increases as it the chances of un checking of few
transactions increases because of the confusion or fatigue, which is another weakness that
occurs in the internal control procedure.
D) Here we will discuss the role of audit related technologies or tools. Before we discuss
their role we will discuss different types of audit tools (Arif 2015):
 Audit Enquiry: Enquiry is usually done by the auditor to enquire about previous records
or audits of the organization and these enquiries are generally helpful in other audit
procedures. In enquiry audit, the auditor gains information financial or non financial from
within or outside the firm.
 Management Representation: Management representation is a conformational letter by
the organization to the auditor of the firm stating that the firm has provided the auditor
with all the true and clear information for the audit (Winston 2000).
 Audit Sampling: Audit sampling is another tool that is used by the auditor in inspecting
the organization. In audit sampling the auditor applies the process to all the units under
100% in way that all the units have an equal chance of getting selected. There are
different methods of audit sampling, few of them are: 1) Haphazard sampling 2)
Stratified sampling 3) Systematic sampling 4) Block sampling

Above are few tools that are being used in the process of auditing, the role of these tools are
highly important in the process of auditing as without these tools an auditor will not be able to
perform the inspection (Trinton 2017). Audit is done to prepare a true and clear financial report
of an organization and in absence of these technologies or tools an organization and an auditor
can’t prepare any financial report of the firm (Gurton 2000). These tools of auditing are widely
accepted because of their reliability in the world of auditing. Results given these tools and
techniques never disappoint anyone.
Conclusion
Above is all what the audience wants to know about auditing procedure and its tools. After
observing all the relevant information about auditing process, tools etc, a thorough and a concise
conclusion has been prepared here. Auditing is a process that is really important for a firm to
conduct with a help of an auditor. Auditing is not possible, if proper tools of auditing are not
available. An auditor inspects all the accounts, transactions whether financial or of non financial
nature and after conducting a proper inspection, an auditor prepares a final true and clear
financial report about the firm that can be used by its owners, clients, or potential customers to
know the profitability of the organization.
Bibliography
Accountant, C 2017, ICAS, viewed 12 July 2017, <https://www.icas.com/ethics/ethical-standards-for-
auditors>.
Ajay, T 2013, 'Importance of ethics in Auditing ', Ph.D, Business Management, Panjab University, Kalyani
Publishers, Punjab.
Arif, R 2015, SlideShare, viewed 15th March 2015, <https://www.slideshare.net/osamarizvi/6-audit-
techniques>.
Barbasor 2012, 'The Best Accounting Information Systems', Sunday Business world, vol 1, no. 45, p. 1.
Brian, B 2000, Things to be inlcuded in auditing, 2nd edn, Cournet, France.
C L, CS 2017, 'Assurance & Auditing', Business & Tax liabilities , vol 1, no. 10, p. 5.
Canada, OOTAGO 2004, OAGC Canada, viewed 10th feburary 2015,
<http://www.oag-bvg.gc.ca/internet/English/att_20040306xe05_e_13231.html>.
Gurton, M 2000, 'Inspection Tools', in K Shimmon (ed.), Deep understandings of Audits and Assurance,
2nd edn, Becky Publishers, London.

Investopedia 2015, viewed 28th April 2017,
<http://www.investopedia.com/terms/g/generalledger.asp>.
Joey, B 2014, 'How important is auditing', Property & Business, vol 3, no. 100, p. 20.
kallis, S 2003, 'Contents of Auditors report', City Entrepreanuer, vol 3, no. 5, pp. 4-5.
Karkol, K 2011, Risk Assessment in Auditing, 5th edn, U.K european piublishers, London.
Lotich, P 2017, Internal Audit Procedure, MB TV, Dhaka, viewed 15 june 2015,
<https://thethrivingsmallbusiness.com/internal-audit-8-step-process/>.
Singhania, V 2009, '45 different ethics of an auditors ', Mails Recovery, 5 july 2009, p. 2.
Trinton, M 2017, 'Sampling Techniques in Auditing', Business & Property, vol 32, no. 100, p. 2.
Winston, S 2000, 'Different Technologies & Tools of Auditing', Chartered Accountants Associations , vol
5, no. 100, pp. 50-60.