LVIV INSTITUTE OF BANKING OF UNIVERSITY OF BANKING OF THE NATIONAL BANK OF UKRAINE
Individual work «Role of auditors.External and internal audit»
Performed : Nosal U.I. Group 305FKbs Checked: Chorniy V.J.
Lviv 2012
Role of auditors.External and internal audit
The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, but similar concepts also exist in project management, quality management, water management, and energy conservation.
On the other hand, it’s an examination and verification of a company's financial and accounting records and supporting documents by Certified Public Accountants.
The purpose of an assessment is to measure something or calculate a value for it. Although the process producing an assessment may involve an audit by an independent professional, its purpose is to provide a measurement rather than to express an opinion about the fairness of statements or quality of performance.
As a general rule, audits should always be an independent evaluation that will include some degree of quantitative and qualitative analysis whereas an assessment implies a less independent and more consultative approach.
Auditing standards
The auditing process is based on standards, concepts, procedures, and reporting practices, primarily imposed by the American Institute of Certified Public Accountants (AICPA). The auditing process relies on evidence, analysis, conventions, and informed professional judgment. General standards are brief statements relating to such matters as training, independence, and professional care. AICPA general standards are:
1.The examination is to be performed by a person or persons having adequate technical training and proficiency as an auditor.
2.In all matters relating to the assignment, an independence in mental attitude is to be maintained by the auditor or auditors.
3.Due professional care is to be exercised in the performance of the examination and the preparation of the report.
Standards of fieldwork provide basic planning standards to be followed during audits. AICPA standards of field work are:
The work is to be adequately planned and assistants, if any, are to be properly supervised.
There is to be a proper study and evaluation of the existing internal control as a basis for reliance thereon and for the determination of the resultant extent to which auditing procedures are to be restricted.
Sufficient competent evidential matter is to be obtained through inspection, observation, inquiries, and confirmation to afford a reasonable basis for an opinion regarding the financial statements under examination.
Standards of reporting outline the required auditing standards relating to the audit report and its contents. AICPA standards of reporting are:
The report shall state whether the financial statements are presented in accordance with generally accepted accounting principles.
The report shall state whether such principles have been consistently observed in the current period in relation to the preceding period.
Informative disclosures to the financial statements are to be regarded as reasonably adequate unless otherwise stated in the report.
The report shall contain either an expression of opinion regarding the financial statements, taken as a whole, or an assertion to the effect that an opinion cannot be expressed. When an overall opinion cannot be expressed, the reasons therefore should be stated. In all cases where an auditor's name is associated with financial statements, the report should contain a clear-cut indication of the character of the auditor's examination, if any, and the degree of responsibility he or she is taking.