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XII. Read the text and answer the following question:

  1. What is audit?

  2. What is the audit designed to?

Who is auditor?

The word "audit" can be used in a number of different contexts to describe almost any type of checking operation, in the text the term will be used to describe the process leading up to the expression of an opinion on the published accounting statements by an independent firm of accountants.

In the UK, all limited companies are required to have their accounts audited by a suitably qualified independent accountant.

If the accounting statements were not subjected to an independent audit, the directors would be preparing the figures on which their own performance would be assessed. Even if the majority of company directors are assumed to be honest, they would have a motive to distort the information to be published in the annual report. This would obviously undermine the credibility of the statements. If users of the accounts can't be confident of the figures, there is a little point in publishing them.

The audit function is a vital component of the system of controls which is designed to ensure that directors are accountable to shareholders and other parties interested in the company. For example, the requirement that the directors offer themselves for re-election on a regular basis would have little value if the shareholders were not provided with a credible source of information to base their voting decisions on. It is interesting to note that in the USA, where only quoted companies are required to have an audit, many companies are nevertheless compelled to have one done on a voluntary basis because American banks often demand audited accounts before they will grant a loan.

If the auditor succeeds in increasing confidence in the quality of published information, then it is unfair to describe him as a statutory nuisance.

XIII. Read and remember some English idioms useful for businessmen:

1. Doctor the account - to falsify the accounts in order to make them appear better (or worse) than they really are; фальсифікувати рахунки.

2. Square an account - to pay a bill; розраховуватися з кимось; сплачувати рахунок.

Lesson 8

I. Read the following words and word combination and learn their meanings by heart:

Allocation - розміщення, розподіл; essential - суть, невід'ємна частина; management - менеджмент, управління, дирекція; a management level - рівень управління; a management structure - структура управління; a management style - стиль управління; to be responsible for - відповідати за; a flow of information - потік інформації; to forecast - передбачати; autocratic - автократичний, властний; to set objective - поставити мету; to take into consideration - брати до уваги; influence - вплив, впливати; labour productivity - продуктивність праці; experience - досвід; in the focus - у центрі; to draw up - складати (документ); harmonize - узгоджувати; authority - влада, сфера компетенції, повноваження; research - дослідження; involvement - залучення; to be accountable for - бути відповідальним за.

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