So
Auditing is the systematic process of objectively obtaining and evaluating
management's assertions related to the company's economic position and
their financial statements.
So to
conceptualize what we're trying to do in Auditing is
that at the end of every year or annual calendar year, a company will issue
something called financial statements.
Those financial
statements are issued to external users of the company. Banks
investor bondholder’s federal government age governmental agencies, so they
are released to external users people outside of the company to make decisions
on whether or not to buy hold or sell their positions with that company.
So if
you're an investor, you might look at those financial statements and determine
whether or not you're going to buy more shares. You're going to hold the stocks
that you currently have or then you're going to sell those shares.
Now
those financial statements we as the external users
of those audited financial
statements can't just believe everything
that we're given. Hence, we have what we call independent external auditors who
will verify and check for the reasonableness of those financial statements well
management is going to make assertions, or they're going to apply declarations
to the auditing financial statements and us as
the external auditors.
A financial
audit is conducted to provide an opinion about whether financial
Audit statements. Specified criteria state the information is
verified. Usually, the rules are international accounting standards. However,
auditors may conduct audits of Audited
financial statements prepared using the cash basis or
some other basis of accounting appropriate for the
organization.
In
providing an opinion about whether accounting standards fairly state
financial Audit statements, the auditor gathers evidence to determine
whether the reports contain material errors or other misstatements.
The audit
opinion is intended to provide reasonable assurance but not absolute certainty
that the financial statements are presented fairly
in all material respects and give an accurate and fair view by the financial
reporting framework. The purpose of an audit is to provide an objective,
independent examination of the financial Audit statements.
This
increases the value and credibility of the Audited financial
statements produced by the management. This increases user confidence in
the financial statement reducing vest risk and
consequently reducing the cost of capital of the preparer of the financial
statements.
By
the UAE GAAP auditors must
release an opinion of the overall Audited
financial statements in the auditor's report. Auditors can
issue three types of accounts other than an unqualified/unmodified
opinion.
An unqualified auditor's opinion is the opinion that the Audited financial statements are presented
fairly. The qualified idea is that the financial Audit statements
are presented fairly in all material respects by UAE GAAP.
Except
for a material misstatement that does not however pervasively affect the user's
ability to rely on the financial statements, a qualified opinion can also be
issued for a scope limitation that is of limited significance.
Further,
the auditor can instead issue a disclaimer because
there is insufficient and appropriate evidence to form an opinion or because of
lack of independence. In a disclaimer, the auditor explains
the reasons for withholding an idea and explicitly indicates that no opinion is
expressed.
Finally,
an adverse audit opinion is issued when the
financial statements are not present justly due to departure from UAE GAAP and the departure materially
affects the financial statements overall. In an adverse auditor's
report, the auditor must explain the nature and size of the
misstatement and must state the opinion that the financial statements do not
present fairly by UAE GAAP.
Financial
audits are typically performed by firms of practicing accountants who are
experts in financial reporting. The financial review is one of many assurance
functions provided by accounting firms. Many
organizations separately employ or hire internal auditors.
Who do
not attest to financial reports but focus mainly on
the internal controls of the organization external auditors may choose to place
limited reliance on the work of internal auditors.
Auditing promotes transparency and accuracy in the financial disclosures made
by an organization.
Therefore
would likely reduce such corporations concealment of unscrupulous dealings
internationally the international standards on Auditing is
an issued by the International Auditing and
Assurance Standards Board EOS is considered as a benchmark for the audit
process.
Comments
Post a Comment