ROLE OF AUDIT
The evolving nature of business requires all entities to be built on solid foundations with an effective structure. In this respect external audit is becoming a dynamic management tool as an oversight function in managing risks.
The audit methodology uses various methods to obtain the evidence that are required. Some of the features of our audit include:
- Planning: We plan our Audit before any engagement but having obtained preliminary data from the client is Trial Balance, client meeting, draft Accounts etc. Our planning focuses on the risk areas which may include high value or based on inherent risk areas and how to approach the audit. Planning also involves estimation of time required to complete the assignment.
- “Risk Based Approach” Careful monitoring and control of risk is fundamental to the successful management of any business. Risk is defined for these purposes as being the probability that an item in the financial statements will be misstated. By carrying out an assessment of risk at the planning stage, the auditor is able to identify the areas that require more attention. The risk assessment determines the amount of effort required in each area and helps to concentrate effort on high–risk areas.
- Knowledge of Clients operations: The auditor has to obtain a thorough knowledge of the organization’s operations that is being audited. This includes knowledge of the general economy in which the client is operating.
- Understanding of the control systems – Audit involves obtaining an understanding of the accounting and other control systems of the entity being audited. If the auditor establishes that the control system can be relied upon and are operating effectively, he is able to reduce the level of detailed testing. Accounting systems are increasingly computerized and the auditor is required to design procedures to test such systems. This requires the auditor to have sufficient knowledge of computerized information systems.
- We appreciate that each audit assignment we undertake has different aspects to consider e.g. the nature and size of the business, the style of management, the economic environment in which it operates and the legal reporting requirements, all of which require an exercise of judgment in formulating our approach, rather than following a rigid set of procedures.
- Our audit is conducted in accordance with the International Standards on Auditing and we ensure that all work carried out is planned, controlled, recorded and reviewed and complies with our quality control standards.
- True and fair view – The auditor’s opinion states whether the financial statements present a true and fair view. True and fair means that the accounts do not contain any material misstatements and are prepared in accordance with an identified financial framework (e.g. International Financial Reporting standards (IFRS) and the requirements of any Statute Act). An error is material if it could influence the economic decisions of users taken on the basis of the financial statements. In planning his work the auditor is guided by the materiality concept, and aims to identify any material errors in the accounts.
- Assistance – Although it is management’s responsibility to prepare financial statements, we shall provide necessary assistance to ensure that the financial statements are, as far as possible, in accordance with IFRS and contain relevant information to the users. The financial statements will be prepared in accordance with IFRS.
- Management involvement – Throughout the audit process, we will keep the Directors and the management informed of progress and problems encountered. If any problems are encountered that could impact on our audit opinion, we will inform administrators at the earliest opportunity and advise them on what they should do to avoid qualification of the accounts. A senior member of the audit team will be on site throughout the audit to guide the rest of the team and resolve issues as they arise.
Corporate Governance structures, Controls and IT systems assurance We review the organization’s corporate governance structures with a view to benchmarking with best practices and focusing in particular to areas such as;
- Compliance with IFAC Standards
- Compliance with provision of IFAC Code of Ethics
- Adhere to business and procedures and internal controls
- Compliance of loans to Directors and management
We will review the internal controls within the organization’s operations to ascertain the extent of reliance we can place on your systems and processes. During the audit, we will carry out a review of compliance with laid down controls, after consultation with management to determine all envisaged risk areas.
The scope of our audit will include a review of your controls over your IT environment and core business operations. Our audit team is appropriately skilled to identify risk areas for focus by management