BUU44670 Audit and Assurance Assignment Example TCD Ireland
Audit and assurance are important aspects of financial management. An audit is a process of verifying and validating financial information, while assurance refers to the act of providing an opinion on the reliability of that information.
Both audits and assurances are critical in ensuring that businesses maintain accurate records and present an accurate picture of their financial status to their shareholders and other stakeholders. They also help to protect businesses from potential legal action if fraudulent or inaccurate information is released.
Assessment Answers of BUU44670 Audit and Assurance Ireland
In this unit, there are many types of assignments given to students like individual assignments, group-based assignments, reports, case studies, final year projects, skills demonstrations, learner records, and other solutions given by us.
In this section, we are describing some tasks. These are:
Assignment Task 1: Have an appreciation of the auditing function and be able to illustrate specific knowledge of key international auditing standards, as used in auditing practice worldwide.
The main aim of an audit is to provide accurate and reliable information about the financial status of a business. However, even the best accounting standards will not automatically result in this outcome; it takes both time and effort on behalf of auditors to achieve their goals.
A wide range of management processes should be undertaken to ensure that financial records are as accurate as possible, while judiciously using the information that is available to auditors.
- Reviewing all of the business’ financial transactions prior to recording them in order to ensure that no errors have been made
- Ensuring that transaction records are recorded on a deadline basis, according to agreed procedures
- Establishing systems of internal control that are designed to minimize the risk of errors in recording transactions
- Ensuring that there is appropriate supervision of staff, with responsibility for certain tasks being delegated only to experienced personnel
- Ensuring that required certifications and authorizations have been received from relevant parties before transactions can be accepted as legitimate
- Checking all supporting documentation relating to a financial transaction, including invoices, receipts, ledgers, etc.
- Reconciling financial transaction records to ensure that the transaction has been accurately recorded
- Questioning accounting practices that appear unusual or suspicious
- Conducting “informal” audits of business operations through questionnaires and interviews with business personnel, customers, etc.
The International Standards on Auditing are a set of professional auditing standards that have been designed to ensure that audits are conducted in an appropriate manner, resulting in accurate information being recorded.
These standards cover the scope of an audit (i.e. what it should encompass), the performance of audits (i.e. how they should be conducted), and reporting on the results of an audit (i.e. how information gathered through audits should be communicated to relevant parties).
Assignment Task 2: Demonstrate comprehension of the role, responsibility, and duty of the auditor as well as the purpose, benefits, and limitations of auditing.
An auditor is a professional responsible for assessing the financial statements of a company or organization. Auditors look for any irregularities that may have occurred and then communicate their findings to the company’s management. The auditor’s role, responsibility, and duty are to provide an independent and objective assessment of a company’s financial statements.
- Role: The role of the auditor is to provide an objective opinion about whether or not financial records are accurate, reliable, and can be relied upon. They will usually communicate their findings in the form of a written report, though in certain circumstances they may also make oral reports.
- Responsibility: The responsibility of auditors is to ensure that their audits meet specified standards of quality. Auditors are also responsible for establishing the procedures that they will follow when conducting an audit and must ensure that their findings can be supported by evidence gathered through the course of their work.
- Duties: The main duty of auditors is to provide accurate and reliable information about a business’s financial status. However, they also have a duty of care to society as a whole. In providing their reports, auditors must disclose all relevant information and opinions that might influence an informed decision. Before making any statements or expressing any opinions about a business’s financial status, the auditor should gather sufficient evidence to support those statements and opinions.
Purpose of auditing: The main purpose of auditing is to provide an objective assessment of the financial status of a business so that people interested in investing in or doing business with the company can make informed decisions.
Audits also provide management with feedback about their performance, enabling them to take appropriate action (if necessary). Another reason for conducting audits is that they help meet legal and fiscal obligations.
Benefits of auditing: Auditing is beneficial to all parties (investors, management, etc.) who rely on financial reports when making decisions. Investors benefit because they can make investment decisions with greater confidence in the accuracy and reliability of the information that has been provided to them. Management benefits from audits because they can use the information gathered in their audits to improve performance and take appropriate action if necessary.
Limitations of auditing: One limitation of auditing is that although they are an important source of information for investors, not all businesses choose to have their financial statements audited. Therefore it may be difficult or even impossible to receive reports from auditors about certain businesses. Another limitation of auditing is that while they can provide extremely useful and important information, the actual findings of audits may be misinterpreted or misrepresented by journalists and/or members of the public who only read the headlines instead of the full report.
Assignment Task 3: Assess the importance of ethics in auditing and the independence of the auditor.
As a professional, one of the key responsibilities you have is to abide by a specific code of conduct and ethics, especially if you are going to be working with clients. In this case, auditors should follow strict standards set out by their professional governing bodies regarding independence, objectivity, confidentiality, and integrity.
If an auditor fails to maintain these standards of behavior, they can be deemed as not competent and may risk losing their license or even face criminal charges.
- Independent: It is essential that auditors must stay impartial and free of any conflicts of interest regarding the companies they are auditing. An auditor cannot afford to be influenced by any outside forces (business competition, labor unions, family ties, etc.) that would prevent them from providing their clients with an unbiased perspective.
- Objectivity: In addition to maintaining independence, the information that an auditor provides must be accurate and objective. As a result, it is important for them to remain unbiased when carrying out their duties in order to provide reliable reports about a company’s financial status. Objectivity also means being free from any unusual methods or practices when assembling evidence in support of statements made in their reports.
- Confidentiality: For the purpose of confidentiality, auditors are required to keep all information concerning a client’s business or finances strictly private unless they have been given written permission to break this confidentiality agreement. This means that any personal information uncovered during the audit process can only be shared with the company’s management and/or any third parties who have a specific need to know.
- Integrity: The main reason why auditors are required to maintain high standards of honesty, accountability, and integrity is so that they can gain their clients’ trust. Without this trust, an auditor will lose credibility; therefore their opinions, findings, and reports will not be taken seriously.
Assignment Task 4: Outline the main steps in the audit process.
Depending on the size and complexity of a company, an audit can take just a few weeks to complete and involves three main steps:
- Planning: At this stage, it is important for auditors to carefully plan their investigation and negotiate any terms or conditions that may be required before carrying out the actual audit. This will also include working with other parties involved in the audit to agree on deadlines and responsibilities.
- Collection/examination of evidence: In this second phase, auditors will use a variety of documents and business records to assess a company’s financial status and internal control procedures. This may include interviewing various members within the company including executives, board members, employees, and third parties who provide services to the company.
- Report: In this final step, auditors will summarize the results from their investigation and provide a well-detailed report that contains three main sections: an executive summary, a review of findings, and any recommendation made by the auditor based on their findings. Depending on the size of the company being audited, the report may be distributed to a wider audience.
Assignment Task 5: Demonstrate the importance of audit planning and factors impacting it.
Audit planning is important because it helps auditors ensure that they will have the necessary information to perform an effective and efficient audit. In addition, it ensures that company management is aware of the auditing process and its possible implications. Without proper planning, an audit may not be as thorough or produce accurate results.
Audit planning factors: There are many factors to consider when planning an audit including the size of the company, how long it has been operating, and its financial health.
- The size and type of the business being audited is a big factor that can influence an audit’s outcome. This means that an audit on a large, public company with many products will require more time compared to audits on smaller companies or privately owned businesses.
- One must consider whether management is cooperative in providing access to necessary information as well as ensuring that no relevant information will be destroyed. In cases where the company has outdated accounting records, it may take longer to gather all necessary evidence which can affect an audit’s outcome.
- The auditing standards used by the external auditor also have a big impact on the investigation process and its results. For example, if a company is required to comply with PCAOB standards, it will take longer compared to when the company is only required to follow GAAP.
- Time constraints can also affect audit planning such as in cases where an emergent event takes place and the auditor must complete their report within a specific time frame.
Assignment Task 6: Evaluate and assess audit risk and its constituent components.
Audit risk is the chance that an audit will fail to detect a significant error or omission in financial records. This can be due to an internal or external factor that contributes to the misstatement of a company’s financial records.
An auditor’s main responsibility is to ensure that a company’s financial statements are free from material misstatements. In order to do this effectively, auditors must identify and assess the level of risk inherent in their client companies’ activities. The three components of audit risk are detection risk, inherent risk, and control risk.
- Control risks – these risks occur when management fails to establish adequate internal control procedures that could compromise the reliability of the information.
- Inherent risks – these are inherent in the company’s business activities and exist regardless of whether management has taken steps to mitigate them. This includes economic, industry, and operational risks.
- Detection risk – this is the risk of errors or irregularities not being detected by the auditors because they did not perform their review thoroughly enough.
Assignment Task 7: Evaluate control procedures in an internal control system.
An internal control system is a set of policies and procedures that companies use to maintain their records and operations in compliance with applicable laws and regulations. Control procedures are the processes put in place by management to prevent or detect errors or irregularities. It is important for auditors to understand these processes so they can effectively gather evidence related to an audit’s objective.
The three components of internal control that auditors must evaluate include: separation of duties; adequate documentation; and the comparison of financial transactions with recorded amounts.
- Separation of duties ensures that no single person has full control over a company’s operations and prevents collusion between employees.
- Adequate documentation requires all actions to be properly documented and secures evidence even in cases of a potential loss or disappearance.
- The comparison of recorded transactions with documents ensures that the company has correctly entered every transaction into its books.
In order for auditors to obtain sufficient evidence from an audit, they must evaluate internal control procedures at their client companies. In conducting this evaluation, auditors need to understand what components are responsible for maintaining internal control so they can assess whether or not their implementation ensures efficiency.
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