Text 3 what is auditing

Exercise 3.1

Study the vocabulary:

1	fairness and truth	1	законність та чесність
2	audit is conducted	2	аудит здійснюється
3	an internal audit	3	внутрішній аудит
4	an independent	4	незалежний аудит
5	illegal activity	5	незаконна діяльність
6	embezzlement	6	привласнення чужих грошей
7	implement measures	7	приймати міри
8	inaccuracy	8	помилка, огріх
9	profitability	9	прибутковість
10	to lessen the risk	10	зменшувати ризики
11	to assess	11	визначати суму податку
12	identify areas	12	визначає напрямки
13	to uncover	13	розкривати
14	to evaluate	14	оцінювати
15	to meet their objectives	15	досягати своїх цілей

Exercise 3.2

Read and translate the text:

Auditing is the inspection of the accounting records and procedures of a business or organization, by a trained accountant, mainly for the purpose of forming an opinion on the fairness and truth of the financial statements. Usually an audit is conducted by someone from the company itself, an internal audit or by a third-part auditor - an independent or external audit.

An independent audit examines not just the finances of a business, but every other area as well. This is generally to make sure that the company’s procedures are being followed, and to determine whether illegal activity such as embezzlement took place. A tax audit determines whether the appropriate tax was paid.

The benefits of an audit are numerous. Audits can improve a company’s efficiency and profitability by helping the management better understand their own working and financial systems. The management, as well as shareholders, suppliers and financers, is also assured that the risks in their organization are well-studied, and effective systems are in place to handle them.

Audits can also identify areas in an organization’s financial structure that need improvement, and how to implement the proper changes and adjustments. Having an audit also lessens the risk and therefore the cost of capital.

An audit can uncover inaccuracies and discrepancies within an organization’s records, which may be indications of weak financial organization or even internal fraud, although fraud detection is not the main purpose of an audit.

The benefits of an audit:

• Analyze and understand your company’s financial records.

• Identify key areas for improvement in your company.

• Assess risks, economy, efficiency and quality.

• Evaluate new technology.

• Uncover fraudulent or other illegal activities within your company.

• Reinforce and strengthen internal control.

Auditors have a unique broad perspective of a company which they apply to deliver effective analyses and relevant information. Management can use this information to evaluate the company and implement measures necessary to meet their objectives.

Exercise 3.3

Match the words with the definitions:

1	improvement	a	to make or become less
2	adjustment	b	right or suitable; fitting
3	illegal	c	an illogical or surprising lack of compatibility or similarity between two or more facts
4	appropriate	d	a control for regulating
5	to lessen	e	the act of improving or the state of being improved
6	to evaluate	f	the members of the executive or administration of an organization or business
7	the management	g	to judge or assess the worth of; appraise
8	to reinforce	h	obtained, done by, or involving deception, especially criminal deception
9	Fraudulent (adj.)	i	to give added strength or support to
10	discrepancy	j	forbidden by law; unlawful; illicit

Exercise 3.4

Fill in the gaps. Then read and translate:

profitability examines well-studied tax shareholders procedures to determine embezzlement benefits improve

An independent audit …1… not just the finances of a business, but every other area as well. This is generally to make sure that the company’s

…2… are being followed, and …3… whether illegal activity such as …4… took place. A tax audit determines whether the appropriate …5… was paid.

The …6… of an audit are numerous. Audits can …7… a company’s efficiency and …8… by helping the management better understand their own working and financial systems. The management, as well as …9… , suppliers and financers, are also assured that the risks in their organization are …10… , and effective systems are in place to handle them.

Exercise 3.5

Read the text again and put the sentences into a chronological order:

1. The management, as well as shareholders, suppliers and financers, are also assured that the risks in their organization are well-studied, and effective systems are in place to handle them

2. An independent audit examines not just the finances of a business, but every other area as well.

3. Auditors have a unique broad perspective of a company which they apply to deliver effective analyses and relevant information.

4. Usually an audit is conducted by someone from the company itself, an internal audit or by a third-part auditor - an independent or external audit.

5. A tax audit determines whether the appropriate tax was paid.

Exercise 3.6

Read and translate:

The benefits of an audit:

• Analyze and understand your company’s financial records.

• Identify key areas for improvement in your company.

• Assess risks, economy, efficiency and quality.

• Evaluate new technology.

• Uncover fraudulent or other illegal activities within your company.

• Reinforce and strengthen internal control.