Forensic audit refers to the examination of financial records and other company data to gather legal evidence for court purposes. This audit aims to investigate the financial crime and present your findings to the court of law. How does forensic audit work? Let’s have a detailed understanding in terms of working mechanics, The first step … Read more
Highly efficient internal controls indicate a strong control environment and management’s commitment to risk management. Hence, efficient internal controls are expected to reduce audit risk, reduce audit procedures, and requires less time to execute the audit function. Conceptual understanding As part of preliminary audit procedures, the auditors assess the risk of material misstatement and the … Read more
Firms must adopt quality control standards in line with increasing stakeholder expectations and quality control requirements. 6 elements of ISAQC-1 ISQC-1 provides six elements to consider when conducting audits and other related services. According to ISAQC-1, the firm’s senior management is responsible for implementing overall quality control standards. ISQC-1 is a principle-based framework and requires … Read more
An audit program is a detailed action plan enlisting audit procedure designed to obtain sufficient and appropriate audit evidence. In the audit program, each procedure must include detailed specifications, a conclusion on each audit procedure, and reasoning/evidence obtained via procedure execution. This document helps the auditor ensure that all planned auditing areas are covered in … Read more
Following are the procedures for auditing receivables. It’s important to note that priority is given to the sending confirmation because it’s validated by an independent source, which is considered a primary source of evidence. The second priority is the subsequent testing because it helps ensure the specific balance is realized. As a place of last … Read more
Pre-audit refers to performing audit procedures before paying bills/invoices. The purpose of the pre-audit is to ensure procedural formalities related to billing and payment are timely fulfilled. The procedural formalities with respect to pre-audit include but are not limited to, verification, validation, authorization, approval, contractual compliance, and other applicable controls related to bill/payment processing. The … Read more
It’s a proactive assessment or detailed feasibility study of the potential investment opportunity. The due diligence needs to consider financial and operational aspects to avoid any possible surprises. In other words, it’s an evaluation of the deal’s commercial potential to ensure an informed decision is made, considering the strengths/weaknesses of the investment to be made. … Read more
Following are some of the essential duties associated with the external auditor. 1-Maintain independence as auditor Throughout the audit engagement and reporting, the auditor is required to ensure independence from the audit client. In other words, the auditor needs to ensure that threats to the auditor’s independence, such as self-interest, self-review, familiarity, intimidation, and advocacy, … Read more
The scope of external audit mainly covers the preparation and presentation of financial statements. In other words, each financial statement component is an audit area and subject to assessment/examination. Detailed understanding The following are the distinct areas that the auditor needs to emphasize. 1-Compliance with the regulatory framework- The auditor needs to ensure compliance with … Read more
Preanalytical review refers to going through/analyzing the numbers in the financial statement at planning stage of audit. This exercise aims to understand the numbers, financial transactions, and balance movement to identify the risk of potential misstatement in the context of trend analysis, comparative accounting period, contextual relations, market trends, etc. A preanalytical review is performed … Read more