Ordinarily, the auditor’s report on general purpose financial statements is addressed either to
the shareholders or to those charged with governance of the entity whose financial statements are being audited
. statements that have been audited, the entity, and the date of and period covered by the financial statements.
Who are auditors accountable to?
Under Section 235 of the Companies Act 1985 auditors are appointed by and report to
the shareholders of the company
. The auditors provide an independent report to the shareholders on the truth and fairness of the financial statements that are prepared by the board of directors.
Who does the auditor report to?
External auditors are independent of the organisation they are auditing. They report to
the company’s shareholders
. They provide their experienced opinion on the truthfulness of the company’s financial statements and perform work on a test basis to monitor systems in place.
What are the 3 types of audits?
There are three main types of audits:
external audits, internal audits, and Internal Revenue Service (IRS) audits
. External audits are commonly performed by Certified Public Accounting (CPA) firms and result in an auditor’s opinion which is included in the audit report.
Historically shareholders and other users of the financial statements might have spent very little time on the auditor’s report. As the auditor’s report is addressed to the shareholders of the company, it
implies that the KAMs were identified with these users of the financial statements in mind
.
Is Auditing compulsory for?
Thus, a compulsory
tax audit
is required to be completed by a Chartered Accountant if a business has a total sales turnover of over Rs. 1 crore. In case of a profession, if the profession has total gross receipts of more than Rs. 50 lakhs, then tax audit by a Chartered Accountant is mandatory.
Who can be an auditor?
(1) A person shall be eligible for appointment as an auditor of a company only if he is
a chartered accountant
: Provided that a firm whereof majority of partners practising in India are qualified for appointment as aforesaid may be appointed by its firm name to be auditor of a company.
Do auditor has a right to?
The auditor has the
right to attend any general meeting and be heard
, at any general meeting which he attends, on any part of the business which concerns him as auditor[xxvi]. The auditor may make any statement or explanation with regard to the accounts as he may deem fit.
What are the 7 principles of auditing?
- Integrity.
- Fair presentation.
- Due professional care.
- Confidentiality.
- Independence.
- Evidence-based approach.
- Risk-based approach.
What are the 14 steps of auditing?
- Receive vague audit assignment.
- Gather information about audit subject.
- Determine audit criteria.
- Break the universe into pieces.
- Identify inherent risks.
- Refine audit objective and sub-objectives.
- Identify controls and assess control risk.
- Choose methodologies.
What is audit example?
Examples of auditing evidence include
bank accounts, management accounts, payrolls, bank statements, invoices, and receipts
. Good auditing evidence should be sufficient, reliable, provided from an appropriate source, and relevant to the audit at hand.
Why is auditor report important?
The auditor’s report is a document containing the auditor’s opinion on whether a company’s financial statements comply with GAAP and are free from material misstatement. The audit report is important because
banks, creditors, and regulators require an audit of a company’s financial statements
.
Why a qualified audit report is not a good reflection of a company?
A qualified opinion is a reflection of the auditor’s
inability to give an unqualified
, or clean, audit opinion. … If the issues discovered during the audit result in material misstatements that would affect the decision making of the financial statement users, the opinion is escalated to an adverse opinion.
What are the consequences of audit failures?
However, a steady stream of audit failures shows that it is also a technology that harms people. Audit failures are routinely implicated with
loss deposits, loss of employments and loss of livelihoods of individuals
.
Who is liable tax audit?
As per section 44AB, following persons are compulsorily required to get their accounts audited :
A person carrying on business
, if his total sales, turnover or gross receipts (as the case may be) in business for the year exceed or exceeds Rs. 1 crore.
Who appoints the first auditor?
The 1st Auditor shall be appointed by
the Board of Directors
by passing B/R within a period of 30 Days from the date of Incorporation/Registration of the company. In case of Failure to appoint the Auditor, the Board of directors shall intimate about the same to shareholders of the company.
