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The Steps to Follow Before Audit and Apply Them to BSF Ltd

Discuss about the Audit Assurance and Compliance Services.

Auditing is the important aspect in any financial managing company to keep all their data safe, secured and perfect without any missing information for any firm. This report talks about the work given to the auditors for making assessments of the statements related to the financial data by the management. The authorization of auditing the files are given only to those examiners who are found responsible and could present the data to the stakeholders by taking the leadership authentication and ruling out any glitches found in the information while maintaining professionalism and giving them overall finance required to the company by appropriate estimations (Audit.ucsf, 2016).  Any information related to the organization is provided to the auditor as a part of morality and competence obligations. Any suggestions specified by the auditor to the company are given prior importance to execute by the management. The information related to the company should be perfect and complete without any unclear data, so the auditors will have a keen view on all these aspects and wants it to be highly standard and accurate. If found any missing or unrelated information then they would enquire about it and clear the doubts (Cso, 2016). The task of assessing the financial statements is completed only after noting the ambiguities like revenue of the company, important assets and expenditure for that particular duration.

Any accountant who has accepted for auditing the financial statements should be complaint to the laws by considering the fact that he should not get threatened by the organizations group or overlook the conducts of ethical rules as it is the suggested criteria from the ethical guidelines. It should be noted that accepting the task that leads to the cause of threats should be avoided by the auditor which is an essential point to be kept in mind (Isaca, 2016). So the rules in ethical guidelines specifies that before considering to execute any task for auditing you need to be aware of the factors that are mentioned in the guidelines. All the necessary information related to the clients and records of the business are needed to be gathered by the auditor for the present work and need to give the brief outlook of the work and issues if found so that it would not mess up at the end of the audit as it is dealt with the client outside (PwC, 2016).

Condition at Which Audit Firm Accepts to Do the Audit of BSF Ltd

There is always a chance of rejecting the given task if found any proposed threat or insecurity. It clearly implies that every accepted task should be dealt carefully nevertheless of taking long time in assessing the audit files while it gives an opportunity of knowing the customer in depth. As the client gets approval from the auditor for auditing the files they take into consideration those formalities while never getting compromised on their objectives (Rbk, 2016). Threats can be expected from the new firms as a part of their job if any of the auditing team is related to the organization members in terms of share. Expectations of any threat to the auditing team from the client never says that the proposal has to be taken off or stop in between it can even been carried out under proper protection by safeguarding themselves from opponents. Measures should be taken to get away from the issue repeatedly and demolish it completely to avoid any further threats in future (Isaca, 2016). The later level of audits are accepted by identifying if there are any further issues involved with them. Solutions should be designed for safeguarding the audit team from being threatened by the clients. Auditor efficiency varies based on the organization they are chosen for. It drastically varies if greater organizations are involved in auditing work. Clients such as BSF which is a high level industry the auditor is expected with special skills of efficacy and should be highly capable in order to understand the terms and policies of that firm in regards to their context (Rbk, 2016). In these aspects evaluation should be to the greater extent if auditor is accepting the task and it is a sign of inviting the threat on their own if they are not eligible for this task to complete and accepting it if unable to sketch out the business details at a prospective level. The satisfaction of expectations of clients , reaching the deadlines specified by them are need to be carefully understood by the auditor and should fulfill this requirements before approving the assigned task (Audit.ucsf, 2016).

Not presenting the accurate solution that is according to the situation then it creates the way to the threats related to audit firm while giving the suitable conditions for the beneficial of the financial statements. Three kinds of risks are involved in auditing they are:

  • Risk of control
  • Risk of inherent
  • Risk of detection

Any possibilities of missing the data and taking commissions or interpreting the data in a wrong way in the financial statements then these are considered to be the inherent risks. These consequences vary from the controls and should be noted that are important to be verified. If the risk is at high level, certainly the industry has to face the risk of inherent which is similarly found with BSF limited (Rbk, 2016). The standards of BSF limited are independent from other firms and have their own judgments which are personal and voicing the nature with no restrictions are the rules required to step ahead. This implicates that risk of inherent is pretty high.

There is no significant risk of control identified with BSF limited in such case as it is less than 5 percent involved. If mechanism required to control the process is not properly handled then that leads to control risk which can be aptly defined by this and it apparently makes a way to the threats if failing to recognize the statements that are materialistic (Isaca, 2016). Appropriate control measures internally are to be proposed to solve the misinterpretation regarding the BSF. Auditor should give an opinion on the control measures that are being input in the BSF. By implementing such measures it seems to work out well at BSF and efficient.

BSF is comparatively having higher threats as it is the top level industry and the details related to their organization are not clearly given to the auditing team. This figure out the control measures and identifies that situation is controllable (PwC, 2016).

If failing to recognize the missing statements from the financial bills of the company then the risk of detection comes into the picture. And it describes the inability of the auditor or giving an opportunity for the company by the auditor (Audit.ucsf, 2016). A customized systematic manner is to be followed while auditing the financial statements and has to rule out the missing of data or any other manipulations in the statements and appropriate corrections are to be proposed as it is not expected to record it in the books without necessary corrections as it affects the user’s interests at later stages. Multiple audit visits can be carried out to verify the mistakes and to reduce the chance of risks (Rbk, 2016).

Mixture of three risks of audits is finally presented by the audit team after the completion of entire auditing process (Isaca, 2016). Increase in the three different risks such as risk of inherent, Risk of control and risk of detection are to be determined to know the risk involved in audit.

Risk in Audit = Risk of control x Risk of detection x Risk of Inherent

To identify the threats involved in auditing the task the audit team has found the process and has to report the possible ways to reduce the threats by acknowledging them is the work given to the team to make a final decision on the entire threats reduction. If the risk level is unmanageable, then the proposed suggestion is at rejection (Rbk, 2016). The risk level is proposed with number of safeguards process in case of risk of detection since the risk is at insignificant level. High labor and lengthy duration is required for this and approval is taken from the management before accepting any task (Isaca, 2016).

Risk of inherent and risk of control levels are inversely proportional to the risk level of detection. Risk of detection is chosen to be at lower level by the audit team if threat of inherent is pictured in the situation while giving way to the risk of inherent at high peaks (Audit.ucsf, 2016). The final threat for BSF appears to be at higher level in auditing process for threat levels of detection and inherent.

The calculations involved in audit risk are as follows:

Risk in Audit = Risk of control x Risk of detection x Risk of Inherent

=0.05 x 0.8 x 0.9 = 3.6% or 0.36

The threat level less than 10% is expected by the audit team to be moderate in general. Hence it is considered that threat of audit on BSF is on the safer side. This reveals that there are no restrictions in taking the task for auditing the financial statements.

The adequate amount of proofs related to the audit is to be collected by the audit team as a part of the auditing program in order to follow the appropriate systematic procedure of auditing the financial statements. The auditing process is carried out only if the account system of the client industry is evaluated by the team for example here it is the BSF limited. The accounting system is studied in detailed by the auditing team is the strategy followed on the clients tasks (Rbk, 2016). This at later stages are tested  by conducting control and other tests which are related to this process to make sure that all proofs are gathered in the given duration of time. At the end the audit team has to be sure of providing the evidence correctly about the client’s financial statements.

The audit programs that are certainly recommended are as follows:

Reports related to finance- on monthly basis

List of accounts to be viewed

Suggestions to be followed from the previous audits

Proposing the financial balance at year end

Reports to be sent to the required clients and list of funds needs to be received

Predictive check on the account balance thoroughly

Ledgers are maintained by the clients which are to be checked keenly and other related files

The data from all the sectors should be matched after totaling the accounts

The office accounts are to be linked to banks statements

Number of transactions occurred should be verified and amount taken for the purpose is utilized accordingly or not should be checked

The auditors from external team need to follow the entities regarding the irregularities on financial statements from the journal. The audit process is regulated using the journal from the department of accounting for accurate verification. The managing is enquired regarding the entries by the audit team and accordingly the funding is given (Cso, 2016). BSF has designed a success factor that the success in business is based on the development and research carried out. The uncertainty of research depends on the external factors. After attaining the success from such a research program then it can be taken for benefiting the needs of customers.

The activities of research and development are to be carried out properly to get a success and the necessary targets should be identified. The targets which are in between should be executed depending on the budget allocated and the duration of time. BSF follows the journal guidelines to show the report effectiveness before marketing them (Audit.ucsf, 2016).

The performance from the research that is undertaken newly by BSF is found to be quite complex but cost on research are given on daily basis of expenses and revenue. Collection of material and major equipment’s is given huge capitals (Rbk, 2016). The decision of fixing the funds is decided by the audit team as it has to be carefully tasked based on the requirements of work in the industry.

The three entities that are involved in triple bottom line addendum are the environmental, social and economic production in the organization. For the audit to be in a signature process Spreckly has designed this system in 80’s and made a first approach. BSF limited is corresponding to this triple bottom line terms and standards hereafter. The credit’s for the work executed on the financial statements is appreciated (Gay & Simnett, 2000). Though the auditing process looks extended because of the procedure but the company management is pleased with the friendly approach environment and the respectful communication (PwC, 2016). The media reports that these rules are criticized by industries of other firms because of their diversion to the fish production company rather than the suppliers of food materials. This has made an attempt of getting food for next generations. It created a bias between the extremely poor and high people so the approach was not taken into account (Gay & Simnett, 2000).

On the progress of working on this account though the initial take off was not appreciated it was considered as better solution in the later stages. In the scientific research, the triple bottom line is considered to be the success measure but it is not really accepted by the auditor to sign off as they were reluctant to accept (Whittington & Pany, 2001).

From the conclusions it is evident that auditor has to get convinced and sign off the document because of the huge information that is available and processed through the auditing process is correct. After performing the extensive research the information is given based on the conditions in the market place and the predictions derived from the situations are submitted. The management is provided with the patent value that is capable of in producing the efficient output in future (Whittington & Pany, 2001). The less availability of advanced technology is providing very less competition to the management and as the time progress it will change the opinion. There might be drastic change in regards to competition which is not exactly related to the market research (Gay & Simnett, 2000). After a proper understanding is created in the market then we can notice a great interest on the patent value in another one or two years or so (Gay & Simnett, 2000). The price is however fixed based on the popularity of product in the market and its sales conditions. The management is extremely not worried as it can get back the value of it in the later stages after fine evaluation in the market.

References

Audit.ucsf.edu. 2016. Audits (Assurance and Compliance) | Audit & Advisory Services. [online] Available at: https://audit.ucsf.edu/audits-assurance-and-compliance [Accessed 11 Sep. 2016].

Cso.ie. 2016. Chapter 5 - Audit, Assurance and Compliance Arrangements - CSO - Central Statistics Office. [online] Available at: https://www.cso.ie/en/aboutus/governance/corporategovernancestandard/chapter5-auditassuranceandcompliancearrangements/ [Accessed 11 Sep. 2016].

Isaca.org. 2016. [online] Available at: https://www.isaca.org/knowledge-center/research/pages/audit-assurance-programs.aspx?cid=1003563&appeal=pr [Accessed 11 Sep. 2016].

Gay, G.E. and Simnett, R., 2000. Auditing and assurance services in Australia. Mcgraw-hill.

PwC. 2016. Points of view. [online] Available at: https://www.pwc.com/gx/en/services/audit-assurance/publications/regulatory-debate.html [Accessed 11 Sep. 2016].

Rbk.ie. 2016. Audit, Assurance & Compliance. [online] Available at: https://www.rbk.ie/services/audit-assurance [Accessed 11 Sep. 2016].

Whittington, R. and Pany, K., 2001. Principles of auditing and other assurance services. Irwin/McGraw-Hill.

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