Financial Auditing Report: Key Findings and Analysis

This report delves into various aspects of auditing, commencing with an examination of control tests, which are quality assurance techniques used to assess the effectiveness of a testing mechanism in preventing or identifying errors. It then identifies key account balances at risk of material misstatement and the key assertions at risk, along with substantive tests and analytical techniques. The report proceeds to discuss audit evidence, including inquiry, inspection, observation, and analytical review, highlighting their significance in gathering audit proof. It then explores Key Audit Matters (KAMs) and their implications, as well as the auditor's responsibilities in addressing audit errors and the importance of property valuation. The report also differentiates between items relevant to the head of internal audit and those relevant to both external and internal auditors, emphasizing the role of audit committees in ensuring organizational success and the application of audit methods in providing organizational guidelines and performance goals. References to relevant literature are included.

Auditing

Contents
QUESTION One..............................................................................................................................3
QUESTION Two.............................................................................................................................3
QUESTION Three...........................................................................................................................5
QUESTION Four.............................................................................................................................5
PART A..................................................................................................................................5
PART B..................................................................................................................................5
QUESTION Five.............................................................................................................................6
REFERENCES................................................................................................................................8

QUESTION One
A control test is a quality test technique employed by a consumer organization to assess the
efficacy of a testing mechanism to avoid or identify content errors. The accountants could choose
to depend mostly on monitoring system of even a customer for their audit process according to
the outcomes of that very test (Earley, 2015). Unless the results show that the control systems are
feeble, conversely, the accountants boost use of substantial tests that usually raise the demand of
an audit. Whenever the accountants find a flaw in a monitoring check, the random sample is
extended and more review is conducted. When any errors arise, they may find the degree of
which the controls are inadequate owing to a systemic failure of regulation or the fact that the
mistakes are individual incidents that represent the actual efficacy of the regulation in problem.
Nature: Incidental and part-time salaries seem to provide a clear documentation track, and
the inspector should presumably pick employee examples, monitor the compensation connected
with the scheme and verify the correct permit for hours of service, etc. The auditors will check
the implementation efficacy of the controls chosen for review by evaluating if the inspections of
the business have been performed according to specified authority and expertise to effectively
execute the inspections, fulfil the compliance goals of the organization and effectively avoid or
identify defects or theft which may result in material errors.
Timing: Everything more than 12 months of experiments will have to be carried out in the
present period. Improve comprehensive appraisal of various considerable accounts at year-end as
a consequence of dramatically weakening business dynamics and gather further informative
audit opinion from rigorous administrative review as the company's monitoring system has found
systemic vulnerabilities.
Extent: The results are influenced mostly by the planned reliability standard but by the
anticipated departure date. When they are classified as comparable to the prior year, monitoring
experiments should be conducted compared to that in the past year. In the case of the inspection
method, compliance tests are typically performed on a sample of transaction-related records
during the year. This shows that the monitoring system has functioned reliably during the current
period.
QUESTION Two
1. Two key account balances at risk of material misstatement.

 The audit must be subject to stringent and reliable checks on the documents provided by
the company whether the auditor wishes to include the documents in the design and
execution of future procedures. The auditor’s assessment of these control system is
typically restricted to those regarding financial reporting dependability (Groomer and
Murthy, 2018).
 Improvement of the performance of a test means determining whether the test will
efficiently avoid, identify and fix material mistakes on a person or in conjunction with
other tests. Controlling means that there is power and the individual using it. The
assessment of the operation of a test that is not successful makes no sense, and the
development of a test is then first considered. An incorrectly built system can constitute a
substantial internal system deficiency.
2. Key assertion at risk
"Management references, whether tacit or not, contained in the financial report used against
the auditor to resolve the numerous forms of possible misrepresentations that may arise. Thus,
all external influences and company-specific considerations are included in the audit process
required to evaluate and adequately analyse the chances of content misstatement. The risk of
serious attributes occurrences, situations, activities and lack of actions affecting an entity's
capacity to attain its targets and excluding techniques or the establishment of unacceptable goals.
3. Account balance and assertion are at risk
Claims for payment and incident classifications and linked divulgations for the auditing process
 Occurrences: Transactions as well as incidents reported or published, including transfers
and aspects associated with that organization have happened.
 Completeness: All activities and incidents that really should have been reported and the
relevant reports to be contained in the income statement.
 The financial reports also contained sufficient quantities of cash, obligations and
ownership investments and therefore have properly reported and defined any subsequent
assessment or distribution change and relevant documents.
4. Substantive test
Analytical techniques are an essential component of the audit phase which consists of
assessments of increased by providing undertaken through an investigator into appropriate
financial and nonfinancial connections. Particular circumstances that can contribute to

differences in such ties involve particular irregular or suspicious sales, adjustments of contracts,
market alterations, spontaneous anomalies or errors, for example.
QUESTION Three
Audit evidence seem to be the procedures, strategies, and strategies that auditors conduct to
acquire audit proof that allows them to conclude and express their feelings on the audit
engagement set out.
1. Inquiry: Auditors are asking administrator and associated management to gather information
and provide a clarification on the subject that accountants have noticed and sometimes
investigate about business processes as well as how monetary records are kept, and also the
major regulate over commercial transactions.
2. Inspection: This mainly applies to records for confirmation or for expressing support. This
is among the most critical and can require record review at 60 per cent of auditing process.
3. Observation: Observation is one auditing procedure used by auditors to get idea of the real
procedure or even the methods in which customers performed aspects of business and gather
audit procedures primarily. This method of audit technique mainly confirms the process the
customer informed, actual proof, and being used for audit facts in terms of generating their
own estimate used to equate them with the concept of the company.
4. Analytical Review: Analytical analysis is not the method used to obtain audit proof, but it is
the technique used to examine irregular activities or incidents as both the basic or
framework for certain tests to be carried out. For example, if the auditor finds that there have
been uncommon exchanges or events as a consequence of using investigative study,
therefore the investigator would use other relevant processes to collect evidence. The
analytical method could be used for the kinds of financial or activities that happen
frequently or refer to transactions of everyone else.
QUESTION Four
PART A
The primary reasons for crucial audit problems (KAMs) were that a segment would enable
businesses valuable information. The results of this study supporting previous research which
indicate that the knowledge was deemed valuable for shareholders have been accomplished with
this purpose. Consequently, KAMs clearly represented what was meant to already happen in the

best businesses. KAMs will also have a beneficial impact on businesses that are willing to
enhance governance. The method of announcing the findings of the investigation report that
appears like the committee has a good impact on the efficiency of the audit. Auditor will update
to date, there is no proof that KAMs are already used to rising the responsibility of the inspector.
In reality, several unfinished reports have been found (Harrison, 2018). ISA 701 provides a
decision-making process focused on discretion in order to support auditors determine what
concerns are to be treated as KAMs from the audit. In addition, they will pick KAMs from across
all aspects they interact to the board and reporting committee of the board that require "timing of
the audit interest" and, particularly, where there may be a greater risk of material mistakes or
where substantial leadership or compliance judgments were also implicated, should specifically
address them.
PART B
1. The accountant promptly advises the correct top management, unless forbidden by statute
or policy, in good time of any mistakes made during the examination. If management will
not fail to fix any or more of the mistakes that the accountant reports, it will gain an
explanation of the explanations that the examiner has not fixed them and it will take
advantage of the interpretation in the assessment but whether or not the financial
performance everywhere are lacking any factual errors. The auditor can ask
administration to evaluate a class of transactions, account or divulgation processes to
assess the extent of the real loss in the accounting type, payment history or divulgation to
the management to consider the purpose of an inspector's error, to allow reasonable
changes to the financial reports.
2. These combination variables suggest that trading financial that houses are overvalued
will ultimately sell for far less than if the properties were sold at the correct cost from the
outset. This situation means a failure of issues and money cost for customers and a
negative effect mostly on final service charge of the representative. When an agency
overestimates their properties and would effect on their subsequent selling, which could
provide specific amount to buyers will have a negative experience, which will damage
the credibility of property companies. The goal is to give members the highest
opportunity by clever online marketing to receive second guidance. Shadow can allow
you to concentrate on these assets, to obtain the directions and sell them more efficiently,

if the provider wants to move agents, if operatives in certain region undervaluing the
assets (He, Zeadally and Wu, 2015).
QUESTION Five
A) Items are primarily relevant only to the head of internal audit.
Examining the strategy formulation method, qualitative and available knowledge of the
consistency of management decisions and the commission shall announce the findings. A correct
evaluation of the organization’s decision management method will not provide the executive
management structured process. Residual danger is an existing danger and would be the
remaining risk following intervention by management to minimize a harmful event’s effect and
probability, despite risk control actions. A risk controlled within control measures or
communication systems is sometimes defined as the market value. Current danger can then be
carefully handled and become a controlled danger cannot be overlooked (Sookhak, 2015).
Internal auditors tackle concerns central to the organization's sustainability and success. Like
independent auditors, they find larger concerns, such as the credibility, development,
environmental effects and how they handle their staff, outside financial risks and accounts. In
short, audit committee help make sure the success of organizations. They do so with a guarantee
and guidance mix. The guarantee of today’s research is that supervisors and state legislators will
know quite well how this same processes and procedures aimed at keeping the company on track
maintenance. Those who offer, the premium assistance in which appropriate methods are used to
enhance such processes and procedures.
B) Items are significant and direct concerns for both the external auditor and the head of
internal audit.
Regardless of the total value of the company deal, a check of controls is produced. The
exam's primary objective is seeing how a system operates properly enough that the cost sum in a
dollar will not have an impact on the object of the study. Controls concerning both financial
statements and operational activities targets for internal control surrounded by asset safeguards
against unapproved acquisitions, uses or disposals could include. Analysis techniques vary from
minor equivalences to the application of complicated calculations with many interactions and
data items. A basic principle behind the implementation of audit methods are that there can
logically be assumed to remain logical connections between the information and proceed in the
lack of established conditions. The audit can often provide organizational guidelines and

performance goals whether they relate to details the audited throughout the implementation of
audit processes or reviews (Minnis and Shroff, 2017).

REFERENCES
Books and Journals
Earley, C. E., 2015. Data analytics in auditing: Opportunities and challenges. Business
Horizons, 58(5), pp.493-500.
Groomer, S. M. and Murthy, U. S., 2018. Continuous Auditing of Database Applications: An
Embedded Audit Module Approach1. In Continuous auditing. Emerald Publishing
Limited.
Harrison, L., 2018. Environmental, health, and safety auditing handbook. McGraw-Hill.
He, D., Zeadally, S. and Wu, L., 2015. Certificateless public auditing scheme for cloud-assisted
wireless body area networks. IEEE Systems Journal, 12(1), pp.64-73.
Minnis, M. and Shroff, N., 2017. Why regulate private firm disclosure and auditing?. Accounting
and Business Research, 47(5), pp.473-502.
Sookhak, M., 2015. Dynamic remote data auditing for securing big data storage in cloud
computing (Doctoral dissertation, University of Malaya).