Introduction
In the early days of computers, many people were suspicious of their ability to replace human being performing complex tasks. the first business software applications were mostly in the domain offinance and accounting. there was calculations options of the reports from the numbers that wereentered into the system which was done through computations techniques based on samplingmethodology. this was done through the collection of the exact receipts and paper statements by thesystem’s auditor.
Unfortunately, there is not match information concerning the amplitude of the system’s records. the needed party may be an agency that deals with regulations, an owner of assets, or any stakeholder inthe exercise of the process of the systems environment, including systems managers themselves. thatpersons will have an aim in consigning the audit. the main objective may be to confirm the exactnessof the system's calculations, validating that systems are appropriately accounted for as assets,evaluating and assessing the operational integrity of an automated process, making sure thatunauthorized persons done not access confidential information in the system.
Auditing Process.
Auditing of information involves several methods that should be considered when undertaking it. thesemethods includes the following;
Planning Adequately
Planning is a fundamental process in anything that is done by individuals. consequently, its needed inauditing too. planning in the auditing trails entails auditor formulating scopes and objectives byexamining, evaluating and assessing the audit trails. an auditor has to notify the client of the auditingprocess, discuss the objectives and aims while validating the scope of the examination which is done informal meeting that has management.
Assessment of the Risk
Risk assessment is necessary in auditing process. this has been in existence for the past 20 years. thisapproach of auditing refers to the core process of auditing on areas that are prone to risk andmisstatement. but this should be done basing on the auditing standards.in 2003, there was the last revision to the standards of auditing and governing risk assessment wherebyisa315, dealing with the identification and assessment of the risk material and misstatement respondedto assessed risks.
Developing a Program that Consist of Objectives and Procedures.
Another process that is vital is creating an audit program that consist of objectives and procedures to berunning header: auditing review report of healthsouth scandalundertaken during the exercise of the auditing process. this includes the preliminary review, it alsooutlines the fieldwork needed to achieve the organization’s objectives as long as auditing is concerned.
Evidence Gathering
In any auditing process, evidence is important. isa 500 audit evidence has identified around severaltypes of evidence gathering procedure that can be used in obtaining auditing evidence. they include;inspection of documents and records, inspection of tangible assets, observation, enquiry, confirming,recalculation, reperformance among others.
Evaluation of the Strengths and Weaknesses
It is so important for an auditor to evaluate the strengths and weaknesses based on the testing to becarried out.
Creation of Reports and Recommendations.
in auditing process, this is usually the last step which involves coming up with report and
recommendations to the organization.
Auditing of Healthsouth Scandal Report Outline.
Healthsouth corporation is one of the largest publicly traded health care located in birmingham,alabama. it offers both facility-based and home-based services to around 36 states in united states ofamerica.
The company was involved in scandal that shoot to the earnings that were allegedly inflated to $ 1.6billion to meet stockholders expectations. this was done by the ceo and the founder, richardscrushy. mr scrushy allegedly told underlings or employees to make up numbers and figures andtransactions from 1996 – 2003.
Apparently, he sold around $75 million in stocks a day before the company posted a huge loss,triggering sec suspicions which led to him being found as the master planner.mr scrushy was acquitted of all 36 counts of accounting fraud, but was convicted of bribing thegovernor of alabama which led to 7 years in prison sentence.
Irregularities Found in the Scandal Report
Hundreds of millions of dollars have been uncovered in the unreported accounting fraud that took placeat healthsouth, this was said by the company after the auditing process.another irregularity report by the healthsouth was that the forensic audit done bypricewaterhousecoopers was the fraudulent of amount ranging from $3.8 billion to $4.6 billion. thiswas in accordance to government’s estimation the previous year.
The fraud included $2.5 billion in fraudulent accounting entries from 1996 to 2002, $500 million inincorrect accounting for goodwill and other items involved in acquisitions from 1994 to 1999, and $800million to $1.6 billion in ''aggressive accounting'' from 1992 to march 2003, said bryan p. marsal, thecompany's chief restructuring officer.for example, accounts receivable on money owed to healthsouth was booked as income, he said. ''thevictims of the fraud were the security holders, the equity holders,'' mr. marsal said in an interviewrunning header: auditing review report of healthsouth scandalbefore briefing investors in new york.healthsouth shareholders and bondholders lawyer by the name doug jones said that the report was aproper acceptance about the value of the case.another irregularity that was found was the fraudulent on the government program for those who aredisabled and the elders called medicare. about $6 million was found by the auditor.
Relevant legislation, and generally accepted auditing standards andisaca’s corbit framework found in the healthsouth scandal.
Isaca contains very basic principles and important procedures that are identified. these are veryfundamental principles are mandatory as guiding factors. for the case of healthsouth scandal, some ofthe legislative and generally accepted standards and isaca’s corbit framework include thefollowng;
In planning and performing the audit to reduce audit risk to a low level, the is auditor should considerthe risk of irregularities and illegal acts.
The is auditor should maintain an attitude of professional skepticism during the audit, recognising thepossibility that material misstatements due to irregularities and illegal acts could exist, irrespective ofhis/her evaluated risk irregularities.the is auditor should obtain an understanding of the organisation and its environment, includinginternal controls.the is auditor should obtain sufficient and appropriate audit evidence to determine whethermanagement or others within the organisation have knowledge of any actual, suspected or allegedirregularities and illegal acts.
When performing audit procedures to obtain an understanding of the organisation and its environment,the is auditor should consider unusual or unexpected relationships that may indicate a risk of materialmisstatements due to irregularities and illegal acts.
the is auditor should design and perform procedures to test the appropriateness of internal control andthe risk of management override of controls.when the is auditor identifies a misstatement, the is auditor should assess whether such amisstatement may be indicative of an irregularity or illegal act. if there is such an indication, the isauditor should consider the implications in relation to other aspects of the audit and in particular therepresentations of management.running header: auditing review report of healthsouth scandalif the is auditor has identified a material irregularity or illegal act involving management or employeeswho have significant roles in internal control, the is auditor should communicate these matters in atimely manner to those charged with governance.if the is auditor encounters exceptional circumstances that affect the is auditor’s ability to continueperforming the audit because of a material misstatement or illegal act, the is auditor should considerthe legal and professional responsibilities applicable in the circumstances, including whether there is arequirement for the is auditor to report to those who entered into the engagement or in some casesthose charged with governance or regulatory authorities or consider withdrawing from the engagement.the is auditor should document all communications, planning, results, evaluations and conclusionsrelating to material irregularities and illegal acts that have been reported to management, those chargedwith governance, regulators and others.
Recommendations
Audit strategies are like pace setters, they give direction, time lines and the scope of audit trails.increment in visibility. for a good, audit report that entails quality information there should be a widerange of increased visibility.the report should demonstrate credibility in that, the risks should be strategic ad be easily understood.another one is a well articulated business value that is felt by the stakeholders
