Importance of Strategic Auditing in Risk Management and Accounts Preparation

STRATEGIC AUDITING

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1............................................................................................................................................3
Impact of regulatory environment and professional standards over the auditing process used by
business........................................................................................................................................3
TASK 2............................................................................................................................................8
Importance of auditing in risk management and accounts preparation.......................................8
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1

INTRODUCTION
Strategic auditing can be described as a review or evaluation of business's strategic plan
in an objective manner. This process is designed by senior leaders and stakeholders of the
business in an attempt to meet future objectives of an organization. While conducting strategic
audit for an organization, various analytical activities are being performed which involves
resource auditing, analysis of core competencies, performance analysis, portfolio analysis and
SWOT analysis (Shemaieva and Tolok, 2020). The purpose of strategic audit is conduct in depth
review to identify whether the business is efficiently meeting its objectives and goals or not. In
addition to this, it has been examined that whether resource utilization in business is done full or
not and accordingly, it is believed that a strategic audit if carried out in successful manner, then
business would definitely get benefited as result of such audit. Audit manager or accountant
while conducting strategic audit undertakes to compare current business state with the laid out
goals and objectives of the business within their strategic plan. The present report consist of two
tasks, where in the first task the explanation pertaining to the impact of regulatory environment
and professional standards over the audit processes adopted by business will be done. Also, the
application of audit concepts and principles within the audit strategy of business will be
discussed. Furthermore, the legal and professional requirements pertaining to auditing will be
detailed in this report. In the second task of this report, the importance of auditing in the
preparation of account and risk management will be explained by including arguments with
regard to how auditing helps in the determination and minimization of risks. At last, the
importance of auditing will be explained by focusing on roles and responsibilities auditors and
directors while preparing company account. Accordingly, current developments in the field of
auditing will be identified.
MAIN BODY
TASK 1
Impact of regulatory environment and professional standards over the auditing process used by
business
There are some or the other regulations meant for regulating a body of individuals such
auditors and audit companies which can have great impact over the process of auditing adopted
within every business. Within UK, the FRC (Financial Reporting Council) is meant for
promoting integrity and transparency within every business to protect the interest public and

stakeholders. The regulation is meant for accountants, auditors and actuaries and accordingly,
FRC sets out the code known as Corporate Governance and Stewardship for businesses within
UK (Eltweri and et.al., 2018).
The auditing processes begins with the planning, notifying departments regarding
upcoming audits their purposes, opening meeting to discuss objectives and purposes of audit,
carrying out fieldwork, drafting report on the basis of fieldwork, obtaining management
responses in the form of recommendations over draft report, conducting closing meeting with the
management of each department to discuss the report and management responses, distribution of
final audit report and at last the follow-up review was performed by recognised body. All these
are the steps involved in the process of auditing carried out in businesses. There is a huge impact
of regulatory environment and professional standards meant for regulating and controlling the
behaviour of auditors and accountant over these auditing process. With regard to UK, the
following regulations are meant for controlling auditing processes used in businesses:
 FRC as a regulatory body sets standards and formal behaviour to be adopted by auditors
and guides in terms of how it could be implemented in practice. This is done to ensure
that auditors are following best practices while conducting audit in a competent and
independent manner, so that detection of omission and errors within financial statements
along with faithful reporting could be possible. Accordingly, it can be said that regulatory
body is necessarily needed for true and fair audit process within businesses.
 Regulatory environment sets framework of auditing which list out rules and legislations
to be fulfilled at the time of accomplishing auditing process which leads to appropriate
and fair reporting by businesses (Kazim, Denny and Koshiyama, 2021).
 It is necessarily required by every business within UK to have an audit of its financial
statements once in a year when auditors give their opinion over financial statements of a
business in terms of whether it is indicating true and fair view of the business wealth and
performance by complying relevant legislations. These affects auditing process of the
business which involves hiring qualified auditors and preparation of audit report in
accordance with legislative requirement, so that interest of both internal and external
stakeholders could be protected against fraudulent events.
 With the requirement of reasonable skills and care to be exercised by auditors while
carrying out auditing, better field work with regard to auditing could be performed which