As per the case study the opinion of the audit or a work of an auditor was explained to Jason. The auditor is a person who is appointed by the organization and who gives an independent opinion about the company’s financial structure. The auditor checks whether the financial standards and reporting of all the standards are given by the company. The auditor helps in the getting a true fair and independent view of the financials of the company. It conforms that the financial position, the cost sheet and the operation of the company are in conformity with the various principles and standards of accounting.
An audit is the understanding of the examination of the all the financials of the company. The report of the auditor is shown in the annual report and signed by the auditor. The financial report includes the balance sheet, the cash flows and changes in the equity position and the income statement and the profit and loss .The purpose and the reasons for doing audit is to form a view whether the information presented in the report will reflect the financial position of the organization or the company (Arens et al., 2016).
The auditor examines the financial report and what the auditor must follow and the auditing standards set by the Government institute. Once the auditor completed the work they will provide the report explaining the opinion drawn from the work.
Auditors are the person appointed to discuss the scope of the audit work with the organization, the board and the directors may request for additional procedures to be followed. Auditors maintain an independent form of work and thereby they form a judgement which is independent, true and fair picture. Auditors will determine the auditing procedures the task they will perform depending on the procedures that they will perform. The extent of the audit procedures and the risks identified. The procedures are written as well as the oral question which is asked by the auditor to the company, and the auditor examines financial and accounting records (Arens, Elder & Beasley,2014).
Concept and how reasonable assurance is formed
The auditor engages himself to render the opinion on whether the company’s financial statements are well and fairly represented in accordance with the materials and the financial statements and reporting is done properly. The audit is something which help the public and the stakeholders of the company to come to know about the true picture of the organization, thereby the lenders and investors have the confidence in the financial statements of the organization (Cohen, J. R. & Simnett, 2014).
Auditor is not able to give absolute assurance
In order to form an opinion, the auditor gather various inside information which is appropriate and observes until gaining reasonable assurance. The auditor will then form opinion as to the see whether the financial statements are free from any error or falsification or material misstatement which causes fraud and thereby creating error free task.
The important auditing principles are as follows:
- Inquiring about the management that will help in gaining an understanding of the organization and its functions and financial reporting and the errors occurred
- Evaluating the financials and the internal control system
- Performing analytical process and the variance for account balances of the transactions
- Confirming about accounts receivable with the accounts with the third party
At the end of audit, the auditor will give advice for improving financial reporting so as to maximize the performance (Knechel et al.,2016).
Concept of Professional Scepticism
Professional Scepticism means a questioning mind which is an attitude of being alert so that the possible misstatement due to error and fraud evidences given by the auditor. The auditor is someone who is sceptical in recent times and the work of the auditor is to find error and also provide the evidences by the auditor.
The auditor’s skill is set by:
- The exercise for professional judgement and audit quality
- Enhancing the effectiveness of audit procedure
- Reducing the possibility of error
- Selecting appropriate audit procedures (Louwers et al., 2015).
- Misinterpret audit results
- Overlooking unusual circumstances
The managers always try to give a deceptive picture and the financial information about the company and thereby the figure might not be correct therefore the auditor gives a independent view of the organisation and therefore makes the review of the organisation so as to depict a correct and true picture of the organization (William Jr et al., 2016).
Arens, A. A., Elder, R. J., Beasley, M. S., & Hogan, C. E. (2016). Auditing and assurance services. Pearson.
Arens, A., Elder, R., & Beasley, M. (2014). Auditing and assurance services-An integrated approach; includes coverage of international standards and global auditing issues, in addition to coverage of. Boston: Aufl.
Cohen, J. R., & Simnett, R. (2014). CSR and assurance services: A research agenda. Auditing: A Journal of Practice & Theory, 34(1), 59-74.
Knechel, W. R., & Salterio, S. E. (2016). Auditing: Assurance and risk. Taylor & Francis.
Louwers, T. J., Ramsay, R. J., Sinason, D. H., Strawser, J. R., & Thibodeau, J. C. (2015). Auditing & assurance services. McGraw-Hill Education.
William Jr, M., Glover, S., & Prawitt, D. (2016). Auditing and assurance services: A systematic approach. McGraw-Hill Education.