Auditing

Question 1

Define Auditing

Answer 1

Auditing is the checking of the external accounting reports of a business to ensure that these reports are correct and complete and or the operating systems and policies of a business to ensure that they are efficient

Question 2

Define Internal auditing

Answer 2

Internal auditing is the checking of the operating systems of a business to ensure that they are working properly.

Question 3

Describe Internal auditing

Answer 3

An internal audit includes:
1) A review of the efficiency of the internal controls system

2) A review of the efficiency of other systems, such as, the supply chain (The steps involved in the purchasing and selling of inventory)
3) A check that the policies of the business are being followed and that the business is complying with all laws
4) The detection of errors in the accounting system

Question 4

Define Eternal auditing

Answer 4

The external auditor is an accountant who is not an employee of the business and, therefore, can conduct an independent review of the business

The role of the external auditor of a company is to protect the external users of the general purpose of financial reports prepared by the company. The external audit process gives investors confidence that the financial reports of a company accurately reflect the performance of the company

Question 5

Describe External auditing

Answer 5

The external auditor expresses an opinion as to whether or not the financial report of a company:
1) Gives a true and fair view of the financial position of the company

2) Complies with the AASB accounting standards