The
auditing practices board (APB), which is the body responsible for issuing
auditing standards and guidelines, states:
auditing practices board (APB), which is the body responsible for issuing
auditing standards and guidelines, states:
The objective of an audit of financial statements
is to enable the auditor to express an opinion whether the financial statements
are prepared, in all material respects, in accordance with an applicable
financial reporting framework. The phrases used to express an auditor’s opinion
are ‘give a true and fair view’ or ‘present fairly in all material respects’
which are equivalent terms.
is to enable the auditor to express an opinion whether the financial statements
are prepared, in all material respects, in accordance with an applicable
financial reporting framework. The phrases used to express an auditor’s opinion
are ‘give a true and fair view’ or ‘present fairly in all material respects’
which are equivalent terms.
The ‘application financial reporting framework’
comprises those requirements of accounting standards, law and regulations applicable
to the entity to determine the form and content of its financial statements.
comprises those requirements of accounting standards, law and regulations applicable
to the entity to determine the form and content of its financial statements.
In the UK
the financial reporting framework is the companies act 2006 together with all
the associated accounting standards et. Which comprise UK generally accepted
accounting principles (UK GAAP).
the financial reporting framework is the companies act 2006 together with all
the associated accounting standards et. Which comprise UK generally accepted
accounting principles (UK GAAP).
‘Entity’
is a general term embracing all types of business, enterprise or undertaking
including companies, charities, local authorities, government agencies etc.
some are profit oriented and some are not.
is a general term embracing all types of business, enterprise or undertaking
including companies, charities, local authorities, government agencies etc.
some are profit oriented and some are not.
‘present
fairly’ instead of ‘true and fair’ applies mainly to local authorities. A particular
point is made of the fact that responsibility for the preparation of the
financial statements and the presentation of the information included therein
rests with the management of the enterprise (in the case of a company, the
directors). The auditor’s responsibility is to report on the financial
statements as presented by management. We will come back to this key principle
later.
fairly’ instead of ‘true and fair’ applies mainly to local authorities. A particular
point is made of the fact that responsibility for the preparation of the
financial statements and the presentation of the information included therein
rests with the management of the enterprise (in the case of a company, the
directors). The auditor’s responsibility is to report on the financial
statements as presented by management. We will come back to this key principle
later.
The
auditors should be an independent firm appointed to investigate the
organization, its records, and the financial statements prepared from them. The
role of the organization, its records, and the financial statements prepared
from them. The role of the auditors is to gather sufficient evidence so as to
be able to form an opinion on the accuracy and correctness of the financial
statements. The primary aim of an audit is to enable the auditors to say ‘these
accounts show a true and fair view’ or, of course, to say that they do not.
auditors should be an independent firm appointed to investigate the
organization, its records, and the financial statements prepared from them. The
role of the organization, its records, and the financial statements prepared
from them. The role of the auditors is to gather sufficient evidence so as to
be able to form an opinion on the accuracy and correctness of the financial
statements. The primary aim of an audit is to enable the auditors to say ‘these
accounts show a true and fair view’ or, of course, to say that they do not.
The objectives
of an audit are:
of an audit are:
Primary
To
produce a rest report by auditors of their opinion of the truth and fairness of
financial statements so that any person reading and using them can have belief
in them.
produce a rest report by auditors of their opinion of the truth and fairness of
financial statements so that any person reading and using them can have belief
in them.
Secondary
·
To advise
management of any defects or problems with their accounting systems and to
suggest ways of improving it.
To advise
management of any defects or problems with their accounting systems and to
suggest ways of improving it.
·
To detect
errors and fraud.
To detect
errors and fraud.
·
To
prevent errors and fraud by the deterrent and moral effect of the audit.
To
prevent errors and fraud by the deterrent and moral effect of the audit.
In
addition to carrying out the audit auditors are able to assist their clients
with accounting problems, accounting and financial reporting systems, taxation,
financial risk management and problems.
addition to carrying out the audit auditors are able to assist their clients
with accounting problems, accounting and financial reporting systems, taxation,
financial risk management and problems.
