The report is developed in relation with Audition in which various aspects related with auditing will be discussed. Auditing is the most important aspects attached with the businesses in present scenario. According to the legislation it is required that the company should indulge in the regular auditing practices so that fair and quality trade could be adopted by the organizations available in the market. External auditors play a very vital role to make sure that the company could be validated in the financial information. There are various potential lenders and investors available in the market that requires external audited financial statements before doing any kind of business with the company.
External auditor’s platys a very vital role in providing valuation of the financial statements of the company so that company could ensure to develop effective set of strategies to remain in the market. They helps in providing the accurate information to the people available in the market so that they can make effective decision of whether to invest the money in the company or not or whether to lend money to the organization or not (????????, 2015). There are certain roles and responsibilities played by external audit firm these roles and responsibilities are:
Managers in the companies think that the responsibility of preparing the financial statements is of external auditors. External audit firms provides direction to the company applying which ensures that the company could develop proper set of financial statements and could ensure develop effective set of strategies in relation with the finance and fund available with (Amiram, Bozanic and Rouen, 2016).
Companies working in the market should have appropriate knowledge regarding the entity and the position its holds in the same (Armitage, 2008). Audit firms helps in providing effective set of information to the organizations related with its entity and the environment. By providing accurate information related with the financial statements of the company it helps in determining that where the company stands and what are the next steps that should be taken by it to ensure its success in that market.
Huge portion of the opinion is being based by the external auditors on the evidence on which they examine during the time of audit (Balkaran, 2016). Auditors provide the information related with the riskiness of the clients so as to ensure that sufficient amount of evidence and audits could be collected. Higher the risk more opinions will be required by the organizations so as to manage the risk and ensures to process the work in an appropriate manner.
Independence is being provided by the external audit firms to the companies available in the market. Audit companies help the company in evaluating all the issues and various aspects which could affect the company in the long run and provides them the independence in working in an effective manner (Doxey, 2015). Auditors who fail in providing effective set of information related with the issues or problems which could be faced by the company in near future also fails to provide independence to the company as such type of company cannot take decisions by its own and always remain dependent upon the advisors available in the market.
Financial statements provide effective set of information to the organizations available in the market. It is required that the users available in the market should remain up to date in relation with the financial statements of the company as they invest their money in these organizations to ensure that their money is safe and secure and will provide an effective sum of amount in near future (Ferrell, Fraedrich and Ferrell, 2014). Financial statements are the process which has the ultimate aim of providing the information related with the position and financial condition of the company in the market. This helps the people in making decisions of whether to invest in such company or not. Users have a huge interest in the financial statement of the company because it helps them in making decisions of purchasing the shares of the company. With the help of financial statement users makes the decision of whether to invest in the company or not and make sure to invest at the right place (Hay, 2014).
In the list of the users lenders also falls, it is required that proper financial statement should be provided to the market so that lenders who make the right decision of investing in the right company. Lenders are the users who have a huge interest in the financial statement of the company because with the help of such statement that could make the estimation of the amount that is to be invested by them in the company and insure to make the right decision regarding the investment (Kaptein, 2013).
There are various financial issues which could be faced by the companies in present scenario like expenditure shock, mortgages, risk of income shock, etc. it is required that a regular audit should be done by the external auditors so that companies could get proper set of direction. With the help of the audit teams organizations could evaluate their position in the market and could ensure to make the decisions of the steps that are to be taken by it in the near future (Kehinde, 2015). External Auditors evaluate all the financial aspects and also provides the information related with the valuation of assets with the help of which company could make effective set of decisions regarding investing in the assets or not. Accuracy is the necessity of every audit because without accuracy company cannot get proper evaluation of its financial aspects. It is required that proper investigation should be done so as to evaluate the things in a proper manner. Any breach in the accuracy could directly affect the processing of the organization which will also have an impact on the financial growth as well as position of the company in the market. Accuracy is one of the most affecting aspects attached with the financial statement of the company because it sets the perception in the eye of customers regarding the position and goodwill of the company in the market (Kilgore, Harrison and Radich, 2014).
Auditor’s plays a very vital role in managing the auditing of the firm with the effect of which companies available in the market could ensure to provide better set direction for them. It is required that the auditing of the company should be managed in a proper manner and a proper set of direction should be availed to the companies so that they could make appropriate decisions of investments and expenses (Palea, 2012). Although preparing the financial statement is the duty of the management of the organization but auditors helps the organization in preparing the financial statement and gather the information related with the funds available with the company. Audit firms provides the information related with any kind of fraud or unethical financial activities which has taken place in the organization, it provides the guidance to the company of taking better and effective measures to have a control over such type of unethical activity, audit firms provides all records, documentations and other matters which are relevant for the companies to develop the financial report (Saxena et al., 2010).
Auditors analyse the financial books of the company and help the company in gaining information related with the breaches and loops which could affect the company in the long run. There are certain surprise audits also which are being done by the external auditors to ensure that any kind of unethical or fraudulent activity could be reduced and assurance could be made that the company could run in a smooth and in an effective way (????????, 2015).
Conclusion
After gathering proper set of information related with the auditors and the auditing firms it could be evaluated that auditing is one of the most important aspects attached with the organizations in present scenario. It is required that the companies should work towards to provide better support to the external auditors and should ensure that they should provide proper set of cooperation so that auditors could perform their roles and responsibilities in a proper manner. It is required that the management of organization should understand their roles and responsibilities and should try to avail proper set of information related with the financial statements of the company should company could ensure to process the work in an smooth manner and could manage its finances in an effective manner. Management of the company should understand the importance of financial management and should work towards to evaluate it on the quarterly basis so as to help the company in analysing its position in the market.
References
Amiram, D., Bozanic, Z. and Rouen, E. 2016. Financial Statement Irregularities: Evidence from the Distributional Properties of Financial Statement Numbers. SSRN Electronic Journal, 1(1), pp.132-135.
Armitage, J. 2008. Changes in the importance of topics in auditing education: 2000?2005. Managerial Auditing Journal, 23(9), pp.935-959.
Balkaran, L. 2016. The Importance of Auditing Your Company’s Strategic Plan. EDPACS, 54(3), pp.1-10.
Doxey, M. 2015. The Effect of Increased Audit Disclosure on Financial Statement Users’ Perceptions of Management, Auditors, and Financial Reporting: An Experimental Investigation. SSRN Electronic Journal, 21(3), pp.128-129.
Ferrell, O., Fraedrich, J. and Ferrell, L. 2014. Business ethics. 1st ed. [s.l.]: Cengage learning.
Hay, D. 2014. Auditing, International Auditing and the International Journal of Auditing: Editorial. International Journal of Auditing, 18(1), pp.1-1.
Kaptein, M. 2013. Workplace morality. 1st ed. Bingley: Emerald Group Publishing Limited.
Kehinde, J. 2015. Asset Protection and Financial Statement Fraud : The Audit and Management Function in Nigeria Business Organisation. Journal of Policy and Development Studies, 9(3), pp.166-175.
Kilgore, A., Harrison, G. and Radich, R. 2014. Audit quality: what’s important to users of audit services. Managerial Auditing Journal, 29(9), pp.776-799.
Palea, V. 2012. Fair Value Accounting and its Usefulness to Financial Statement Users. SSRN Electronic Journal, 34(1), pp.145-147.
Saxena, R., Srinivas, K., Rai, U. and Rai, S. 2010. Auditing. 1st ed. Mumbai [India]: Himalaya Pub. House.
????????, ?. 2015. Users of the audit information and its needs in the context of ensuring social accountability of the audit as institute. Technology audit and production reserves, 6(5(26), p.25.
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