Factors Impacting the Quality of Audit Services: A Detailed Analysis

This report delves into the critical factors that influence the quality of audit services. It begins by outlining the importance of audit planning, including developing an overall audit strategy, determining engagement characteristics, and establishing reporting objectives. The report emphasizes the auditor's role in ensuring financial statements are free from material misstatements, detailing the verification of internal controls, supporting documentation, and the proper classification of expenditures. It highlights the limitations of audit, the importance of auditor independence, and the impact of factors such as firm size, industry knowledge, auditor tenure, and fees on audit quality. The report also discusses audit methodologies, including audit plans and programs, and provides insights into process, product, and system audits. The report underlines the significance of maintaining auditor independence and the importance of ethical considerations to ensure accurate and reliable audit outcomes. The report concludes by emphasizing how these elements collectively contribute to the overall quality and reliability of audit services.

AUDITING
ASSURANCE
&
PROFESSIONAL
ETHICS

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Identify and critically discuss the factors that influence the quality of audit services:..........3
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Audit has been carried out by the independent auditor firm in order to ensure that books of
accounts of the client are free from material misstatement or not. The auditor simply gives their
opinion with regard to financial statements by carrying out audit for the same. During the course
of audit, the accuracy of financial statements is being cross checked by audit team with the help
of supporting evidence that shows accuracy of transactions that has been entered in books by
client. This report is basically explaining the factors that would affect the quality of audit
services that has been carried out by independent auditor during the course of audit.
TASK
Identify and critically discuss the factors that influence the quality of audit services:
Before conducting the audit of any entity, the auditor should develop a plan to carry out audit in
structured manner. Such plan would be considered as the overall audit strategy that sets the
scope, timing and direction of the audit, and guides the development of the audit plan.
The multiple factor that an auditor must consider while establishing the overall audit strategy
which are mentioned below:
 Determination of characteristics of Audit:
Identify the characteristics of the engagement that defines its scope.
 Reporting objective:
Ascertain the reporting objectives of the engagement to plan the timing of the audit and
the nature of the communications required.
 Team Efforts:
Consider the factor that in the auditor’s professional judgement are significant in
directing the engagement team efforts.
 Preliminary Work:
Consider the results of preliminary engagement activities and where applicable, whether
knowledge gained on other engagements performed by the engagement partner for the
entity is relevant.
 Nature, timing and extent of resources:

Ascertain the nature, timing and extent of resources necessary to perform the
engagement.
The universal goal of audit to acquire affordable guarantee whether or not the monetary assertion
this is Balance sheet, Income assertion and Cash go with the drift assertion are loose shape cloth
misstatement and speak as required with the aid of using widespread on auditing. The audit has
to cowl all elements of the monetary assertion that is essential being audit and auditor have to be
fulfilled that include all of the records in monetary statements are affordable. The auditor has to
determine the essential records disclosed well in books of debts and inappropriate records have
to be disclosed in notes to debts. The following subjects to be disclosed while acting an audit
function- •
 To verifying the lifestyles and right operating machine of the inner control.
 To decide the right entries in books of account to hold helping documents.
 The right category among the capital nature of expenditure and sales expenditure.
 To affirm the stability sheet, income and loss account and different statements
according there with.
 To take a look at the lifestyles, name and asset price withinside the stability sheet and
are proportionately disclosed.
 To take a look at the result, reveal of income and loss are real and fair.
Audit feature isn't always important to carry out all form of corporation. It relies upon beneath
Neath regulation and voluntary basis.
 The businesses which observed Companies act, banking employer and coverage
employer are important to carry out audit feature beneath Neath regulation.
 Some of the corporation inclusive of Hindu undivided own circle of relatives and
partnership organization there's no want to audit. The inner feature of the corporation
determines to requirement of audit. The corporation desires to get their debts audited
in order that they acquired authorities presents and segment loan.
The advantages of auditing financial statements
 The audited bills assist to agreement of bills to demise and admission of the partner.
 Before receiving the licence for a particular corporation of the authorities there ought to
be want to audited economic statements.
 The audit enables to discover the losses which takes place to the absence of inner control.

 The audit enables in lots of paperwork which includes to settle the tax liability, loans and
buy attention on the time of obtaining business.
 To protective the hobby of the shareholders of the organisation due to the fact
shareholders aren't worried to the control of organisation, the audited economic assertion
enables to decide the real economic role of the organisation.
As per relevant standard the auditor cannot reduce the audit risk at zero and cannot provide
absolute assurance that the financial statement is free form material misstatement due to fraud or
error. The inherent limitations of audit are mentioned below:
 The financial statement is made by management with the applicable international
accounting standard. Furthermore, it includes the judgement of the management so that
the auditors cannot give proper interpretations on the financial statements.
 To obtain audit evidence the auditor has legal limitation.
 The management may not provide to complete information which is relevant to prepare
and performing the financial statements whether the auditor has been requested.
Before appearing, the audit features the auditor ought to observe the subsequent method. The
usual audit method, documenting audit plan, audit programme and audit execution. To making
audit plan the auditor consciousness following points.
 To pay attention the ones location which calls for unique attention
 Timely resolve of problems
 Effective audit crew engagement
 Itinerary and supervision of engagement crew.
 To allocate the paintings in higher manner.
The auditor discusses all factors of making plans with management. The audit making plans isn't
one-time technique the audit ought to alternate the plan as vital at some stage in the path of audit.
When auditor setting up usual audit method they might include:
 To decide the traits of the engagement and its scope
 Ascertain the goal of the engagement.
To set up the general audit method the auditor assists the allocation of assets for excessive audit
regions and use of those assets with the aid of using the engagement group participants for
excessive-chance regions and the quantity of assets allocate to excessive-chance location and
quantity of group participants includes to the stock count. To trade in enterprise condition, to

behaviour surprising activities and failure of audit plan, the auditor might also additionally vital
to redevelop the audit method. In the second one method, auditor shall report the audit plan. The
audit method is ready earlier than the audit plan. The audit plan is element framework in
examine to standard audit method. Audit method and audit plan are inter-associated due to the
fact trade in a single could have an effect on the end result of any other. The essential aspect in
audit plan, the auditor must have know-how of client 's enterprise in order that the audit may be
carry out in powerful manner. They must achieve the industry, and outside elements such as the
relevant monetary reporting framework. To expertise the connection among the change payable
and consumer assist discovers associated events or chance to sales recognition. In the 1/3 degree
the auditor must make the audit programme for larger audits. To achieve enough and suitable
audit proof the auditor verifies the monetary statements of a given company. The audit
application of 1 enterprise does now no longer help any other enterprise due to the fact each
enterprise one-of-a-kind in size, nature and paintings. The offerings furnished with the aid of
using the auditor from venture to venture. The auditor must well time evaluate the audit
application. The auditor plays the audit paintings on the idea of audit application. If any trade in
enterprise coverage they'll now no longer recognize and that they carried audit paintings in
keeping with preceding audit application so complete audit behaviour, there below could be
absolutely misdirected and that they face criminal and regulatory complications
For the motive of production an audit program, the point of interest the ones factors such as:
 Determine the to be had audit proof are reasonable
 To take into account all of the opportunity errors
 Identify the ones vicinity that's cloth for the verification motive. • Determine the scope
and issue of the assignment.
There are important 3 forms of audits as consistent with the fine control gadget they're as follow:
Process audit- It verifies the real technique of co ordering towards the described guidance and set
of standards.
 Product audit- It verifies the product or offerings towards the described standard.
 System audit- A gadget audit is an audit of control gadget this is put into effect withinside
the organisation. As consistent with the requirement of an organisation, the auditor put
into effect the gadget and test towards the usual clause of the precise control gadget.

The company examine all the ones sports which might be achieved earlier than the audit. The
phrase Audit high-satisfactory isn't always easy to outline due to the fact many elements have an
effect on high-satisfactory. According to International Auditing and Assurance Board offers
unique makes a speciality of the high-satisfactory of audit offerings. The elements that they will
have an effect on the high-satisfactory of audit provider which includes:
 Size of the company- The length of the enterprise is vital thing which impact each
undoubtedly and negatively of the audit high-satisfactory. The purchaser chooses the
excellent auditor to attain the excellent auditing. The huge corporations need excessive
recognition of auditor in examine to small audit small corporations. The better
recognition offers the smooth and honest audit file in order that the traders and different
corporations can spend money on organisation due to the fact misguided audit file
decreases company recognition. The different elements which includes expert
competence, auditor qualification and cloth records may be observed in huge
corporations. These elements are affecting the audit company length and audit high-
satisfactory. The particular have a look at of auditing has explored there must be courting
among audit high-satisfactory and audit length. The huge audit company might also
additionally attain the better recognition might also additionally call for better expenses.
They require better stage of auditors to behaviour audit.
 Industry understanding- The enterprise understanding performs a vital position to have an
effect on the high-satisfactory of audit provider. Higher recognition of enterprise
understanding needs the excessive stage of audit file in order that the undoubtedly
courting among the audit high-satisfactory and enterprise. The time period of the auditor
relies upon the enterprise understanding due to the fact new audit purchaser desires to
reap the enjoy the audit understanding. The reputed auditor needs better expenses and
offers file and in reality, audit file that is loose shape cloth misstatement. The gain of
enterprise understanding will increase audit recognition in marketplace and will increase
audit high-satisfactory in addition to audit expenses.
 Auditor tenure- the auditor tenure relies upon at the audit high-satisfactory. According to
auditing requirements the decrease high-satisfactory of audit is predicted due to the fact
long time auditor decreases auditor independence and audit high-satisfactory. The
different thing of lengthy tenure auditor identifies misstatement the use of excessive stage

of information. In quick time period auditor problem honest auditor file however if the
auditor is aware of that the subsequent yr the purchaser switching them then it offers
detrimental audit file at the economic statements. The supervisor might also additionally
transfer the auditor for the subsequent yr however if the auditor changed the audit file,
then supervisor might not generally tend to replace the auditor after receiving the qualify
audit file.
 Auditor expenses- It approach the ones costs which will pay with the aid of using the
organisation to the auditor in opposition to the audit offerings. The audit offerings are
high-satisfactory if the organisation pay better audit expenses so that they need to get
hold of the better high-satisfactory audit file.
 Auditor independence- The auditor must preserve independence and make sure that
they're loose shape control influence. The audit committee carry out the assembly without
the presence of organisation's control to inspire that they're independent.
 Auditor qualification and proficiency- The primary goal of the audit to make sure the
traders that the economic statements are in reality show. It may be very vital vicinity to
broaden the auditor and tremendous audit offerings.
These elements are-
 Enhance the information of staff.
 Treat equals all of the contributors of the staff.
 To growth the management and expert competence.

CONCLUSION
As concluded via way of means of the above record the auditing is defined as a part of the
dealing with an enterprise organisation. The audit characteristic is done via way of means of the
Chartered Accountants. The auditor needs to explicit the opinion at the economic statements
that's loose shape fabric misstatement. The auditor needs to comply with the time period of
engagement, making plans the audit, to compiling the data and reporting the result. The outside
and inner elements each are affecting the audit quality. To carry out the audit paintings with the
usual of auditing and prison requirement. The audited economic statements assist to sanction
mortgage and authority’s grants.

REFERENCES
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