...Status of Management Audit Status of Cost and Management Audit in Bangladesh It is obviously understood that considering the aforesaid multifarious and multidimensional benefits of cost accounting and management auditing the Government of Bangladesh has made keeping cost books and cost accounts compulsory in the Companies Act, 1994 through section 181. The relevant part may be seen from clause (d) of subsection (1) of section 181. Section 220: Audit of certain matters by Cost and Management Accountants: (1) Where in the opinion of the Government, it is necessary to do in relation to any company required under clause (d) of sub-section (1) of section 181 to include in its books of accounts the particular referred to therein the Government may, by order, direct that an audit of cost accounts of the company shall be conducted in such manner as may be specified in the order by an auditor who shall be a "cost and management accountant" within the meaning of the Cost and Management Accountants Ordinance, 1977 (LIII of 1977). (2) An audit conducted by an auditor under this section shall be in addition to an audit conducted by an auditor appointed under section 210. With the advancement of economic development of Bangladesh the Government found in the year of 2001 that it was the proper time to introduce cost audit in Bangladesh and therefore the Government made it compulsory through promulgation of an SRO dated July 8, 2002 the contents of which are produced below: ...
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...6 Phases of a Financial Statement Audit by Kendra James, Demand Media [pic] Auditors analyze material account balances during a financial statement audit. Related Articles • Forensic Audit vs. Financial Audit • How Does a CPA-Audited Financial Statement Add Value? • Financial Statement Certification • What Is a Certified Financial Statement? • Audit Procedures for Income Statements • Phases of the Audit Process A financial statement audit is an engagement performed by an independent accountant to provide assurance that an entity’s financial statements are reported in accordance with accounting principles generally accepted in the U.S. Specifically, certified public accountants, or CPAs, are obtained to provide audited financial statements to businesses, non profit organizations and government agencies. Each audit is customized to meet the needs of the organization. However, the overall approach to every audit is the same. Engagement Acceptance The American Institute of CPAs recommends that an auditor evaluate the risks associated with each engagement. Therefore, a CPA inquires about any special circumstances, the integrity of management and pending lawsuits before performing an audit. In addition, the auditor evaluates the staffing needed to complete the engagement and determines that each staff member is able to maintain an independent viewpoint while performing the engagement. Once the auditor decides to accept the engagement, an engagement...
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...CHAPTER 6 INTERNAL CONTROL IN A FINANCIAL STATEMENT AUDIT Answers to Review Questions 6-1 From management's perspective, the internal control provides a way to meet its stewardship or agency responsibilities. Management also needs a control system that generates reliable information for decision-making purposes. The importance of internal control to the auditor is rooted in the second standard of fieldwork. The controls that are relevant to the entity's ability to initiate, record, process, and report financial data consistent with management's assertions are the auditor's main concern. The auditor needs assurances about the reliability of the data generated within the entity's internal control system in terms of how it affects the fairness of the financial statements and how well the assets and records of the entity are safeguarded. 6-2 The potential benefits and risks to an entity’s internal control from information technology include (see Table 6-1): Benefits: • Consistent application of predefined business rules and performance of complex calculations in processing large volumes of transactions or data. • Enhancement of the timeliness, availability, and accuracy of information. • Facilitation of additional analysis of information. • Enhancement of the ability to monitor the performance of the entity's activities and its policies and procedures. • Reduction in the risk that controls will be circumvented. ...
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... Bank Audits During the Lead-up to the Financial Crisis” During the period before the most recent financial crisis, auditors failed to give advance warnings of systemic risk, leading some of financial institutions collapsed. After research, the investigator suggests that lack of advance warning results from the limitations of existing auditing and regulation and accounting institutions rather than from the inattention of potential risk made by auditors. This paper involves data from samples of all US headquartered US-based bank holding companies. Author uses all available banks each year to assess year-to-year changes in audit risk responsiveness and suggests changes in sample composition affect findings. Author also uses the same set of banks in all years to eliminate the reason of sample composition and introduces the reason that failed firms are excluded from analysis. Author uses a bank audit fee model LAFEE that contains 21 variables. The first five are test variables to show the audit attentions and others are to reflect engagement. In the analysis of the experiments results, author focuses on retention risk, distribution support risks, investment risk and charge-off from 2005 to 2007. By the trends of indicator changes, it’s obviously shown that the failure of risk warning cannot blame on auditor’s inattention. There are three policy implications from such as using risk-based audit approaches will improve the auditor’s ability to recognize and respond to audit risks...
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...CONTENTS 1.0 Introduction 1.1 History 1.2 Market and strategies 2.0 Review of the business performance 2.1 Business opportunities and threats 2.2 Operational strengths and weaknesses 3.0 Findings from the annual report 3.1 Ratio analysis 3.1.1 Profitability 3.1.2 Efficiency 3.1.3 Liquidity 3.1.4 Risk 3.1.5 Shareholder return 3.2 Limitations of ratio analysis 3.3 Corporate governance 3.4 Sources of fund 4.0 Conclusion 1.0 Introduction China Food Company (CFC), located in Shandong province of China, owns a group of well-established food manufacturing businesses that produce a range of consumer condiments together with animal feed. It’s primary product is soya sauce along with other cooking and dipping sauce. China Food Company has a very strong brand for cooking and dipping sauces and is currently the 9th largest manufacturer and seller of soya sauce in China, operating three production lines at its plants in Shouguang City and Weifang City, in the central of Shandong province and employing more than 1000 people (www.chinafoodcompany.com). 1.1 History The company was founded in 1994 in China by Mr Fu Guoping and commenced trading as a manufacturer of Compound Feed for poultry, cows and pigs. It established its first factory in 1995 and diversified into manufacturing higher margin condiments like soya sauce and vinegar, which have become its primary products now. The second factory was constructed in 2001, with an integrated production...
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...Paulding County, GA Financial Statement / Audit Report Review Government and Not-For-Profit Accounting, ACC 410 November 2, 2014 Financial Statement /Audit Report Review This is the Audit Report Review of the evaluation of the Government-wide Financial Statement and the Fund Financial Statement of Paulding County, Georgia. Under compliance of the Governmental auditing standards, GASB Statement No. 34, Paulding County’s report includes Government-wide financial statements, which include the Statement of Net Assets and the Statement of Activities. Also released by Paulding County is the required second set of statements, the Fund financial statements, that include the Balance Sheet-Governmental Funds, Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets, the Statement of Revenues, Expenditures, and Changes in Fund Balances-Governmental Funds, and the statements associated with the other governmental fund categories, general, propriety and fiduciary. The county’s fiscal year ended June 30, 2013 and the reports were released on December 16, 2013 (Paulding County, GA 2013). Mauldin & Jenkins CPA, LLC of Atlanta, Georgia, independently audited the county’s basic financial statements. They audited the business-type activities, the comprehensive discretely presented component units, each major fund, and the aggregate remaining fund information of Paulding County. The component units are either 1) legally separate entities for which the...
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...various financial services provided for an organization based on their individual needs. The needs of companies differ as will the scope of their auditing, attestation and/or assurance service requirements. Auditing boasts both a formal definition and an informal one which describe the accounting function in its basic form as well as its interpretive meaning to the individual responsible for the function, the very core of the profession; ensuring the integrity of financial data as presented. Assurances are defined as “independent professional services that improve the quality of information, or its context, for decision makers (which) encompasses attest services and financial statement. Attest services occur when a practitioner is engaged to issue a report on subject matter, or an assertion about subject matter that is the responsibility of another party” (Accounting Concern, 2015). Auditing Service Boynton & Johnson (2006), describes auditing as “a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users” (p. 6). An audit is part of the overall assurance service that specifically targets information in the financial statements. There are different types of audit services, Financial Statement Audit, Compliance Audit, and Operational Audit. “A financial statement...
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...ISA ISA 500 March 2009 International Standard on Auditing Audit Evidence 500 INTERNATIONAL STANDARD ON AUDITING 500 Audit Evidence Explanatory Foreword The Council of the Malaysian Institute of Accountants has approved this standard in March 2009 for publication. This standard should be read in conjunction with the Preface to Malaysian Approved Standards on Auditing; Preface to International Standards on Quality Control, Auditing, Review, Other Assurance and Related Services; Glossary of Terms and International Framework for Assurance Engagements. The status of International Standards on Auditing is set out in the Preface to Malaysian Approved Standards on Quality Control, Auditing, Review, Other Assurance and Related Services. Applicability International Standards on Auditing (ISAs) are to be applied in the audit of financial statements under all reporting frameworks. Reporting frameworks are determined by legislation, regulations and promulgations of the Malaysian Institute of Accountants and where appropriate mutually agreed upon terms of reporting. ISAs are to be applied in the audit of historical financial information. Effective Date in Malaysia Effective for audits of financial statements for periods beginning on or after January 1, 2010. Reproduction of Full Text of Final IFAC Publication “Copyright © April 2010 by the International Federation of Accountants (IFAC). All rights reserved. Used with permission of IFAC. Contact Permissions@ifac...
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...Steps In Auditing Advanced Auditing 606M Jeremy Borden The purpose of this paper is to explain the purpose, goal, and/or outcome of each step in the audit process. The steps included in these pages are essential when conducting any audit of any company. Although specific audit procedures are different from one engagement to the next, the following steps are involved in every engagement. The first step in the audit process for any engagement is to make contact with the potential client. The goal of this step is to obtain new audit business. This is often times is done through the submittal of a general proposal that includes details on the nature of services provided, the qualifications of the firm’s auditors, anticipated fees, and other pertinent information to persuade the client to choose the firm. If the potential client is a publicly held company, arrangements for the audit are made through the audit committee. The proposal and oral presentations are made to provide a basis for selection. If the potential client is a private company, a partnership, or a smaller company, arrangements are made through the owners, a partner, or an executive of the company. This initial contact will often lead to oral discussions, negotiations, and other fact-finding topics before a final formal proposal is written and the audit is accepted. The proposal will also include a mention of contacting the previous auditor of the potential client. This is important because the potential...
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...officer of a client impairs the independence of the CPA. True False 4. Financial interests of a CPA's nondependent children are attributed directly to the CPA. True False 5. Statements on Accounting and Review Services are enforceable under the AICPA Code of Professional Conduct. True False 6. CPAs may not advertise as to any special expertise other than in accounting, auditing, and tax. True False 7. A CPA may receive a commission for recommending a particular computer system to an audit client. True False 8. The communications between CPAs and their clients are privileged under federal law. True False 9. CPAs can advertise the fees only for their nonattest services. True False 10. The American Institute of Certified Public Accountants has been the primary source for ethical rules for internal auditors. True False Multiple Choice Questions 11. ABC Company is audited by the Phoenix office of Willingham CPAs. Which of the following individuals would be least likely to be considered a "covered member" by the independence standard? A. Staff assistant on the audit. B. An audit partner in the Eloi office. C. A tax partner in Phoenix who performs no attest services for ABC Company or for any other clients. D. The partner in charge of Willingham CPAs (she does no work on the ABC Company Audit). 12. Which of the following statements is true with respect to the PCAOB...
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...Solutions: 1. A review is performed to obtain a reasonable basis for providing limited assurance that the client's financial statements have been prepared in conformity with generally accepted accounting principles. An independent audit is designed to provide a reasonable basis for expressing an opinion concerning whether or not a client’s financial statements have been prepared in accordance with generally accepted accounting principles. There is also a major difference between a review and an audit in terms of the scope of work performed. When a review is done, the main evidence collection techniques are analytical procedures and inquiries of client personnel. Whereas, in an audit, the full range of evidence collection techniques available to an auditor is likely to be used. A review does not assess control risk, tests of accounting records and responses to inquiries by obtaining validating evidence through inspection, observation or any other audit procedure. It can point out significant matters of the financial statements but does not provide assurance of their accuracy. Because reviews are generally not as rigorous as audits, considerably less evidence is typically collected in a review than in a comparable audit engagement. The issue with ZZZZ Best case is that the auditors review was not sufficient enough to review any material misstatements on the financial statements. 2. Third party confirmations should give consistent evidence in support of assertions made by...
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...c 1.) Which item is not included in the General Principles governing the audit of financial statements? a.The auditor should comply with the relevant ethical requirement. b.The auditor should exercise professional judgment. c.The auditor should conduct an audit in accordance with Philippine Accounting Standards. d.The auditor should plan and perform the audit with an attitude of professional skepticism. d 2.) Which of the following choices is not the reason for conducting an audit? a. Expertise b. Financial Consequences c. Remoteness d. Justification a 3.) The audit function operates within a theoretical framework. Choose the incorrect statement regarding the Theoretical Framework of Auditing. a. There should be long-term conflict between the auditor and the client management. b. The audit operates on the assumption that all financial data are verifiable. c. An audit benefits the public. d. What was held true in the past will continue to hold true in the future in the absence of known conditions to the contrary. a 4.) An auditor only provides reasonable assurance. Which of the following reasons supports such idea? a. Because inherent limitations exist in regards the client's accounting and internal control systems. b. Because auditors assume that most assertions presented by the client management are not verifiable. c. Because most auditors do not follow the Philippine Standards on Auditing. d. All of the above. b 5.) Which one of the...
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...Consideration of Fraud in a Financial Statement Audit 1719 AU Section 316 Consideration of Fraud in a Financial Statement Audit (Supersedes SAS No. 82.) Source: SAS No. 99; SAS No. 113. Effective for audits of financial statements for periods beginning on or after December 15, 2002, unless otherwise indicated. Introduction and Overview .01 Section 110, Responsibilities and Functions of the Independent Auditor, paragraph .02, states, "The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. [footnote omitted]"1 This section establishes standards and provides guidance to auditors in fulfilling that responsibility, as it relates to fraud, in an audit of financial statements conducted in accordance with generally accepted auditing standards (GAAS).2 .02 The following is an overview of the organization and content of this section: • • • Description and characteristics of fraud. This section describes fraud and its characteristics. (See paragraphs .05 through .12.) The importance of exercising professional skepticism. This section discusses the need for auditors to exercise professional skepticism when considering the possibility that a material misstatement due to fraud could be present. (See paragraph .13.) Discussion among engagement personnel regarding the risks of material misstatement due to fraud. This section requires...
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...Chapter 7: Assessing Risk and Internal Control Audit Risk Assessment: Auditing is fundamentally a risk management process. Audit risk is related to information risk that financial statements are materially misstated. -lower audit risk by performing more audit work that will give them a high level of assurance that the financial statements are correct. 1) INHERENT RISK (IR)- the probability of material misstatement occurring in transactions entering the accounting system or being in the account balances. Auditors do not created or control inherent risk. Can only assess its magnitude based on prior experiences, management bias, and the nature of the transaction. Look at characteristics of clients business, types of transactions, and effectiveness of accountants. 2) CONTROL RISK (CR): risk that the clients internal control system will not prevent or detect a material misstatement. Auditors do not create control risk, they assess probability of failure to detect material misstatements. Assessment is based on study and evaluation of the company’s control system. **Control risk should not be assessed so low that auditors rely entirely on controls and do no substantive work. 3) DETECTION RISK (DR): the risk that any material misstatement that has not been corrected by the clients internal control will not be detected by the auditor. **Auditors can control this risk by conducting substantive (balance audits) tests. (include: audit of details of transactions and balances, and analytical...
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...officer of a client impairs the independence of the CPA. True False 4. Financial interests of a CPA's nondependent children are attributed directly to the CPA. True False 5. Statements on Accounting and Review Services are enforceable under the AICPA Code of Professional Conduct. True False 6. CPAs may not advertise as to any special expertise other than in accounting, auditing, and tax. True False 7. A CPA may receive a commission for recommending a particular computer system to an audit client. True False 8. The communications between CPAs and their clients are privileged under federal law. True False 9. CPAs can advertise the fees only for their nonattest services. True False 10. The American Institute of Certified Public Accountants has been the primary source for ethical rules for internal auditors. True False Multiple Choice Questions 11. ABC Company is audited by the Phoenix office of Willingham CPAs. Which of the following individuals would be least likely to be considered a "covered member" by the independence standard? A. Staff assistant on the audit. B. An audit partner in the Eloi office. C. A tax partner in Phoenix who performs no attest services for ABC Company or for any other clients. D. The partner in charge of Willingham CPAs (she does no work on the ABC Company Audit). 12. Which of the following statements is true with respect to the PCAOB...
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