17. Which of the following are required to have a written report regarding the a

Question

17. Which of the following are required to have a written report regarding the assertion of another party? Financial Statement Operational Compliance Attestation Assurance Audit Audit Engagement Engagement Audit 18. In a financial statement audit, the auditor A) gathers evidence to determine whether the statements contain material errors or other misstatements B) must have a thorough understanding of the entity and its environment. C) determines whether the financial statements are stated in accordance with specified criteria D) all of the above. 19. Discuss the similarities and differences between financial statement audits, operational audits, and compliance audits. Give an example of each type. Answer:

Explanation / Answer

17… Financial statement audit -- required by law-- audit of the financial records maintained that are maintained on a regular basis , that is necessary in the eyes of the laws ,to give a report to the shareholders /owners of the company---- The auditor asserts in his written report as to the accuracy of recording as well as attesting to the conformity to the existing laws and statutes. Operational audit -- is introduced voluntarily by the company management to test its operational efficiency & effectiveness of its various systems--at the end of which the management expects the auditor to assert the findings & ways to improve . Compliance audit done by regulating authorities to test compliance by the company, as required, normally give reports ,in the form of assertions or otherwise. Attestation engagement auditor is aslo specifically required to verify the records & give report at the end of his work ,attesting as true & fair ,meeting some specific criteria ,for which the attestation is needed. In Assurance engagement also the conducting party needs to produce his findings after verification of the records , in thh form of a report --the outcome of his evaluation-- as an assurance to some other party ,other than the company. So, all the above types of work require a WRITTEN REPORT from the conductimg auditor/professional , containing assertions as per thespecific requirement--- & all these require evaluation of the company's records ,for the purpose of reporting. 18.. D. All of the above. Financial statement audit adds credibility to all the financial & certain non-financial details of the company --attesting to elimination of any material error or mis-statement --ie. Accuracy of recording as well as compliance with GAAP/IFRS 19.. All The three--Financial statement audits, operational audits and compliance audit are similar in going about their work--ie. all require collection & evaluation of the material evidence from the company and finally generate reports as per specific requirements. Differences lie only in the information being examined and the purpose for which the evaluation is made. A financial statement audit is mandated for every publicly held company,by the Securities and Exchange Commission ,to determine ,if all its financial transactions are stated in accordance with the norms as laid down in the U.S. GAAP/IFRS. So, this audit focusses on accuracy in recording & compliance. An operational audit ,initiated by the companies themselves, is intended to evaluate the efficiency and effectiveness of the operating procedures and methods, followed in the business.This type of audits normally covers non-monetary areas also ---ie. not limited to finance area alone. A compliance audit is ordered at the behest of some regulating authority ,like pollution control board , to attest to the conformation of the criteria ,required to carry on the business.But these reports are for individual companies'use & not for public perusal. Example of a financial statement audit will be the regular audited financial results containing the annual statements like the balance sheet, Income statement, cash flow statement, statement of changes to equity along with M&D analysis & Auditors' Report--- say for any publicy-held company such as Apple Inc. or PepsiCo Example of an operational audit will the regular internal audit (meant to be complementary to the financial audit), or any other area-audit initiated by the management in its own interests. Example of a compliance audit can be the periodic inspection of the company's effluent treatment systems ,in place, by the Pollution Control Board, to satisfy itself , before giving the permiiting certificate. All the above, involve study, verification & opinion-formation of the existing systems-- finally giving a conclusive report about its findings .The methodology is the same. But the purpose & the evaluator are different.

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.