International audit and it’s purpose

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An examination of the financial report of a company is called an audit. It is usually presented in the company’s annual report prepared by auditors. It usually relates to a specific past accounting period. Audit report based on selective testing of company’s performance is the obligatory requirement once the audit is completed. The report includes an income statement, a balance sheet, statement of changes in equity as well as cash flow statement and explanatory notes with a summary of significant accounting policies attached.

An audit reflects the financial position of the company at a given date, including information with regards to whether everything what is owned by a company and what it owes is correctly recorded in the balance sheet and are its losses and profits properly assessed. The financial report must be prepared according to certain legal requirements. When the report is prepared, it must be approved by company’s executives (e.g. Board of directors) by making a judgment towards its accuracy.

Audits may also include: asking formal and informal questions, examining tangible items owned by a company such as mechanical and electrical equipment, obtaining written confirmations, testing and monitoring certain procedures being performed in the company’s premises.

Auditing standards
The standards used for proper examining the financial report are set by a government. There are International Standards on Auditing (ISAs) available on the Internet, containing clear statements which should be addressed by auditors. They consist of introduction, objectives, definitions, requirements expressed by the phrase „the auditor shall”, application and other explanatory material.

There is also an e-Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements released in December, 2016 available on the Internet with translations in English, Arabic, Bulgarian, Danish, French, Georgian, French, Kazakh, Italian, Serbian, Russian, Spanish and Thai (for more information see https://www.ifac.org/publications-r...ational-quality-control-auditing-review-other). It includes Consideration of Laws and Regulations in an audit of financial statements and amendments and other international standards, consisting of new requirements which address non-compliance with laws and regulations (NOCLAR) in the IESBA Code of Ethics for Professional Accountants.