...Table of Contents: Question 1A------------------------- Page 3 Question 1B----------------------- Page 5 What is Quality Audit? The principles of Quality Audit, in the sense we mean it here, are based on the style of quality standards used in several formal national and international standards such as the ISO-900x international quality standards. These standards do not in themselves create quality. The logic is as follows. Every organization should define comprehensive procedures by which their products or services can be delivered consistently to the desired level of quality. As was discussed in the section on Quality Management, maximum quality is rarely the desired objective since it can cost too much and take too long. The average product or service provides a sensible compromise between quality and cost. There is also a legitimate market for products that are low cost and low quality. Standards authorities do not seek to make that business judgment and enforce it upon businesses, except where certain minimum standards must be met (eg all cars must have seat belts that meet minimum safety standards, but there is no attempt to define how elegant or comfortable they are). The principle is that each organization should create thorough, controlled procedures for each of its processes. Those procedures should deliver the quality that is sought. The Quality Audit, therefore, only needs to ensure that procedures have been defined, controlled, communicated and used. Processes...
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...in a Quality Audit Project No.: 2 Student Name: Sonia Rana Name : Sonia Rana List of Contents Description Page No. Introduction Quality Audit and Its Importance Audit Team and Their Roles Audit Procedure Entry and Exit Meetings Reporting Audit Standards Summary References 3 4-5 5-7 8-11 11-13 13-14 14-15 15 15 Page 2 of 15 Name : Sonia Rana Introduction: This paper details the importance of the Quality audit, why audit are conducted and what is the purpose of auditing. It explains the process followed to organise, complete and report the audit. Also roles of the various audit team members including external experts/technical specialists are discussed. A brief overview of the audit process, what process and techniques are used during audit process. It also includes the importance of the entry and exit meetings, why these meetings are required and what is discussed in these meetings. This paper explores about the legislations, codes of practices and quality standards that applies to a Quality auditing. Also identifies what reports needs to be made as a result of audit findings, also discusses the formats of the reports and to whom these reports should be presented. A brief conclusion is presented in the last section summarising the findings and discussions. Quality Audits and Its Importance: Page 3 of 15 Name : Sonia Rana Quality audit is the process of systematic examination of a quality system carried out by an internal or external quality auditor or an audit team...
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...SCTC Process Safety Management Audits GM588 August 20, 2011 Johnny Morris SCTC Process Safety Management Audits Introduction Safety Council Texas City (SCTC) is a not for profit organization that provides services to the local petrochemical industry (www.csctc.org, 2011). SCTC serves both the petrochemical facilities and the contractors that work in the facilities. The services provided are safety training that is both instructor-led and computer based training. SCTC also provides the service of writing safety plans also known as Health, Safety, and Environmental (HSE) manuals. At the request of the petrochemical industry facilities, SCTC also offers Process Safety Management (PSM) audits. These audits are a way to ensure and verify information contractors are providing based on their Pre-Qualification forms (PQF). SCTC provides services to help contractors and their employees meet the requirements of the facilities. Contractors must meet requirements by completing a PQF and keeping it current on an annual basis. Contractors are also required to successfully complete a PSM audit which is based on the contractor’s scope of work. PSM audits are based on the completion of the PQF. The PQF contains information such as contractor’s basic information, organizational finances, HSE manuals, training, and documentation. PSM audits are conducted by retired individuals within the industry with no real process management background. Although these individuals have several years...
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...Advantage and disadvantage of non-audit service (a) Understanding the audited company People believe that providing non-audit service can help auditors more understanding the audited company. “PCAOB can use for exam the implication of consulting agreement on the independence of audit function and issues,” said by Doty (TYSIAC, 2013). Through this, auditors can know about the business model, strategy of company, the risk which the company are or will facing and others. With this, the non-audit result can be more accurate and quality by the insight and professional skepticism of auditors (Young, What are the arguments in favor of auditors providing non-audit, 2013). The quality of business’s own system will also affect the result of non-audit report. Quality information which business depends on is delivering by quality of information technology and accounting system. When making decision, manager to refer and base on these information to avoid making wrong decision. This information is normally used by internal auditors as a best position to advice clients. This cause denied increasingly a vital source of people such as a multi-functional audit firm with the relevant wider skills by business (The provision of non-audit services to audit clients). (b) Fees of non-audit report Shareholders can more easy and able to predict the extent of non-audit services which provided by auditors. For some year, the total amount of the non-audit fees which need to pay to auditors...
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...A major step in the direction towards improving the audit quality and at the same time ensuring that Australia’s regulatory framework is in line with international best practice; is the proposed Corporations Legislation Amendment (Audit Enhancement) Bill 2012. Various measures and reforms have been drafted in the legislation with a view to achieve this purpose and also to ensure that the audit regulation framework is in line with the dynamic environment Australia is operating in. Let us discuss these measures to see what they mean and refer to, and form an opinion as to why were these introduced. The first measure requires the audit firms to publish an annual transparency report in the event that they conduct audit of 10 or more significant entities. This is applicable to those audit firms which carry out an audit of 10 or more than 10 significant entities in an year. These entities may be listed companies or other listed registered schemes. The auditor in such a case is required to publish an annual transparency report on the auditor’s website as well as with the ASIC. The contents of the transparency report are required to be as per the provisions of Sec 332B of the Corporations Act and other regulations. These mainly contain information about the ownership, structure, governance and other factual information relating to such audit firms. The idea is that information regarding such audit firms who are carrying audit of large entities is available to their existing as well...
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...339 (SAS 103): Audit Documentation • Auditing Standard No. 3: Audit Documentation • International Standard on Auditing 230’ (Revised) (Site -http://irba.co.za/documents/doc_00535.pdf ) Questions 1] Describe the purposes of audit documentation and explain why each purpose is important. According to AU 339.03, “audit documentation provides the principal support for the”: (a) “representation in the auditor’s report that the auditor performed the audit in accordance with GAAS”, and (b) “opinion expressed regarding the financial information or the assertion to the effect that an opinion cannot be expressed”. AU 339.04 goes on to state that this “audit documentation is an essential element of audit quality” and AU 339.05 further states that “audit documentation is the record of audit procedures performed, relevant audit evidence obtained, and conclusions the auditor reached”. Thus individuals can review the audit documentation to see that the audit was performed in accordance with GAAS, they can identify the reasons for the auditor’s opinion, and they can evaluate the quality of the audit. Paragraph 8 of AU 339 provides a list of additional purposes of audit documentation: • The audit team will use audit documentation to help plan and perform the audit. It is necessary to plan the audit so that the audit team is aware of the work that needs completed and they have a better idea of how long the engagement will last. The audit team will use the audit documentation...
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...Case #2.4 – Enron: Quality Assurance I. Technical Audit Guidance To maximize the knowledge acquired by students, this book has been designed to be read in conjunction with the post-Sarbanes-Oxley technical audit guidance. All of the post-Sarbanes-Oxley technical guidance is available for free at http://www.pcaobus.org/Standards/index.aspx. In addition, a summary of the Sarbanes-Oxley Act of 2002 is also available for free at http://thecaq.aicpa.org/Resources/Sarbanes+Oxley/Sarbanes-Oxley+–+The+Basics.htm. II. Recommended Technical Knowledge The Sarbanes-Oxley Act of 2002 Section 103 Section 203 III. Classroom Hints This case provides students with an opportunity to understand what is meant by quality control in the financial statement audit process and to understand why a quality control mechanism is an important internal control procedure for an audit firm. Further, the case provides a terrific example for students to see what can actually happen when quality control breaks down at an audit firm. In the case of Arthur Andersen, the breakdown in quality control ultimately led to the demise of the firm. To meet these objectives, this case illuminates the role of the professional standards group (PSG) at Arthur Andersen and the dialogue that occurred for several technical issues between Andersen’s PSG and the lead partner on the Enron engagement, David Duncan. We believe it is essential for students to carefully read over the recommended technical knowledge, along...
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...I. Audit Quality The primary role of accounting is to reduce information asymmetry by providing investors with relevant and reliable information in order to create an efficient allocation of resources. However, there is often a tradeoff between relevance and reliability that needs to be considered when imposing regulations (Scott, 2012). When information asymmetry is present, investor faith decreases, compromising the efficiency of the market. In order to prevent market failures, it is critical to maintain investor confidence; this can be done by achieving high audit quality. Definition The PCAOB defines audit quality as providing “independent and reliable audits” regarding management’s financial statements, internal controls and potential threat for going concerns (PCAOB, 2013). Four key aspects of audit quality include independence, objectivity, skepticism, and competence. Maintaining and improving the four elements is critical to increasing audit quality and the usefulness of the information provided. Independence According to the PCAOB Auditing Standards, auditors should maintain independent mental attitudes. Independence is defined by the AICPA Code of Professional Conduct as independence of both, mind and appearance. Independence of mind requires the auditor to act with integrity, free of outside influence whereas independence of appearance requires the avoidance of situations leading to potential conflict of interests. Unless, the auditor is truly independent, the...
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...business, they will demand to have this report verified by a third independent party. * Agency theory goes on to suggest that the appointment of professional external auditors is the most preferred cost effective way of monitoring the agents. * Under strict agency theory, financial reports are thus regarded as reports to owners of the business who are the principals and the external auditor is seen to act for and on behalf of the owners. DEFINITION OF AUDIT STATEMENT OF AUDITING STANDARDS-GLOSSARY OF TERMS issued by the Auditing Practices Board defines an Audit as; “ An exercise whose objective is to enable auditors to express an opinion whether the financial statements give a true and fair view of the entity`s affairs at the end of a period and its profit or loss for the period then ended and have been properly prepared in accordance with the applicable reporting framework” PARTIES TO THE AUDIT PROCES The American Accounting Association suggests that there are four parties to the accountability/audit process; The Preparer/Source- This refers to those individuals who have control of the resources that have been provided by other parties and have the responsibility for preparing the accounting reports that show the position and results of the activities controlled by them. Users of accounting...
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...Course Schedule Course Modules Review and Practice Exam Preparation Module 1: Conceptual issues in assurance Overview This module builds on the fundamental concepts of auditing and other assurance services introduced in your prerequisite auditing course. It begins with an overview of the key drivers in the demand for audits, and then surveys current challenges and issues such as the audit and regulatory environment and the expectation gap. You will also study issues related to the economics of auditing and their impact on auditor motivation and standard-setting; in the process, you will consider different perspectives on protecting the public interest and the public accountant’s role in helping to advance the profession. The various topics integrate information sources related to research in the field and readings from the Ethics Readings Handbook (ERH) , drawing on concepts from your prerequisite accounting theory course. In AU2 , you will study a wide variety of technical, practical, and theoretical material. This module lays the foundation for exploring some of the more difficult areas of professional judgment you will encounter as you progress through the course. When faced with issues that challenge your professional judgment, you are encouraged to think back to the concepts studied in this module to help frame your decision making. Please be sure that you have purchased the CPA Canada Handbook, CGA Student Edition mentioned in the course introduction, as it is required...
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...Introduction The purpose of auditing is increasing the confidence of people who want to do investment. In order to check the financial statement of listed companies, auditing become more and more important in the society. The people cannot know more the situation about listed companies, so they use auditors’ report to think their investment. However, with more and more scandals about auditing, many people think whether external auditors’ reports provide information to investor that serves the public interest under the current regulatory environment. The public interest First, it is important to know what the public interest is. In order to know the public interest better, we can understand it separately. The public represents social that is abstract concept. It conflicts the private that is specific and certainly. Social is universality and uncertainty. Its function is adjective interest. The International Federation of Accountants (IFAC) defines the public interest as ” The net benefits derived for, and procedural rigor employed on behalf of, all society in relation to any action, decision or policy.” It means that everyone in the society may obtain the interest from all society in relation to any action, decision or policy. The auditing profession is relation to the benefit to the society. The public interest from auditing profession is like the responsibility of this profession. This interest is not direct interest, but the auditors will use their behavior to show their...
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...Yuliya Gaydarenko Prof. Franklin Unit 4 – Rough Draft July 11, 2013 The compliance audit, like other audit activities, is intended to provide feedback to management and the audit committee about the control environment, ongoing compliance and conditions for potential risk. The compliance audit should evaluate the effectiveness of the compliance management program, including policies and procedures, training, monitoring and consumer complaint response. A financial institution’s audit committee should determine the scope of an audit and the frequency with which audits are conducted. Examiners are seen questioning institutions about their overall compliance program management and digging into the elements of policies and procedures, training, and quality control assessment. Overlying compliance program management is the role of internal audit. Regulatory guidance and best practices have helped define which elements are necessary to help an organization mitigate risks associated with compliance. Some of the basic elements include: designation of a compliance officer, policies, internal processes and controls, regulatory change management, quality control, consumer complaint response process and audit (Sullivan, 2011). The two elements of assessing the overall effectiveness of a compliance program are quality control and audit. The end goal of a quality control function is to monitor how well departmental policies and procedures are being executed. Ultimately, the...
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......3 Problem Statement............................................................................................ ......4 Research Questions: .................................................................................. .........4 Hypothesis:..........................................................................................................4 Objectives............................................................................................................... .5 Significance of Study............................................................................... ................5 Literature Review.................................................................................................... ....6 Definition of Internal Audit...................................................................................6 Role of the Internal Auditor in governance ..........................................................7 Methodology................................................................................................... ............8 Research Design............................................................................................. ......8 Population............................................................................................................8 Sampling and Sampling Technique.......................................................................8 Data Collection...
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...Disclosure of the Engagement Partner in the Audit Report An International Perspective on the PCAOB Proposal By Jason Bergner and Ling Lin n December 4, 2013, the PCAOB conducted an open meeting to reconsider its proposal to require the disclosure of the engagement partner (and certain other participants) in the audit report, as part of its efforts to improve transparency. The PCAOB is carefully considering the likely costs and benefits of this requirement before making a final decision (http://pcaobus.org/News/Speech/Pages/120 42013_Harris_Transparency.aspx). The authors present arguments for and against requiring audit partner disclosure and summarize the current practice and empirical findings in foreign jurisdictions, such as the EU and China. While the debate for the past five years has been an argument about the possible costs and benefits of a signature or disclosure requirement, the authors believe that the movement of the international community toward adopting common standards may eventually warrant a similar U.S. approach. O Debating the Issue The signature/disclosure requirement has been an issue for almost a decade, first appearing on the PCAOB’s agenda in 2005 (Tammy Whitehouse, “Divided PCAOB Presses for Names in Audit Report,” December 4, 2013, Compliance Week, http://www.complianceweek.com/dividedpcaob-presses-for-names-in-audit-report/article/323604/). The current proposal to disclose of the engagement partner in the audit report stemmed, at least in part, from...
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...Course Schedule Course Modules Review and Practice Exam Preparation Resources Module 1: Conceptual issues in assurance Overview This module builds on the fundamental concepts of auditing and other assurance services introduced in your prerequisite auditing course. It begins with an overview of the key drivers in the demand for audits, and then surveys current challenges and issues such as the audit and regulatory environment and the expectation gap. You will also study issues related to the economics of auditing and their impact on auditor motivation and standard-setting; in the process, you will consider different perspectives on protecting the public interest and the public accountant’s role in helping to advance the profession. The various topics integrate information sources related to research in the field and readings from the Ethics Readings Handbook (ERH) , drawing on concepts from your prerequisite accounting theory course. In AU2 , you will study a wide variety of technical, practical, and theoretical material. This module lays the foundation for exploring some of the more difficult areas of professional judgment you will encounter as you progress through the course. When faced with issues that challenge your professional judgment, you are encouraged to think back to the concepts studied in this module to help frame your decision making. Please be sure that you have purchased the CPA Canada Handbook, CGA Student Edition mentioned in the course introduction...
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