“Oh GOSH! Reflecting on Hackteria's Collaborative Practices in a Global Do-It...
PRESENTATION OF ADVANCED AUDITING
1. Group audit and using the work of
component/other auditors
Joint or group audit means when one audit is being
performed by more that one auditor. It reasons:
1. Size of client
2. Geographical expansion of the client
3. Different nature businesses of client
2. USING THE WORK OF OTHERS
ACTUARIES:
An actuaries is a business professional who analyze the financial
consequences of risk. Actuaries use mathematics, statistics and
financial theory to study uncertain future events, especially
those of concern to insurance and pension programs. They
evaluate the likelihood of those events, design creative way to
reduce the likelihood and decrease the impact of adverse
events that actually do occur.
3. Area:
Calculation of:
1. Gratuity fund liability
2. Pension fund liability
3. Insurance claims liability
What auditors should considered:
1. The qualification and experience of actuaries
2. Their general reputation in profession
3. Logical analysis of their findings
4. Calculation check by historical trend
4. LAWYERS:
They normally deals the cases of companies with other parties in
courts. Because many of these cases have financial affects therefore
auditors need to know their outcomes.
What auditors should considered:
1. The qualification and experience of actuaries
2. Their general reputation in profession
3. Logical analysis of their findings
5. ENGINEERS:
Their opinion is used in the following areas:
1. Mines
2. Gases
3. Percentage of completion in construction contracts
What auditors should considered:
1. The qualification and experience of actuaries
2. Their general reputation in profession
3. Logical analysis of their findings
SOFTWARE EXPERTS:
Their opinion is used in the following areas
1. Development of new software's
2. Assessment of IT risks
6. Point to be considered while
understanding the group
The group structure, including both the legal and organizational structure.
Determine which of the components are considered “significant”
components for the audit.
Components business activities that are significant to the group, including
the industry and regulatory, economic and political environments in which
those activities take place.
Integrity and competence of group or component management
Description of group wide controls, including the consolidation process
Whether the group engagement team will have unrestricted access when
needed, to the component auditors
The applicable financial reporting frame work
Consider whether the group engagement team’s own participation is
sufficient to be able to at as the principal/lead auditor.
7. Point to be considered while
understanding the component
The significance of component including its materiality to the group
financial statements and the level of work to be requested of the
component auditors.
The complexity of the component.
Previous experience and involvement with the component auditor.
The results of recent an internal and external quality reviews of the
component auditor as reported by the component engagement
partner.
Results or actions coming out of recent reviews or inspections by the
regulatory or independent oversight body in the territory of the
group auditor.
8. MODIFIED OPINION
There are three types of modification.
the qualified opinion
the adverse opinion
the disclaimer of opinion
Qualified Opinion:
The auditor concludes that misstatements are material, but not
pervasive, to the financial statements.
The auditor cannot obtain sufficient appropriate audit evidence on
which to base the opinion but concludes that the possible effects of
undetected misstatements, if any, could be material but not
pervasive.
9. Adverse Opinion:
An adverse opinion is expressed when the auditor, having obtained
sufficient appropriate audit evidence, concludes that misstatements are
both material and pervasive to the financial statements.
Disclaimer Of Opinion:
An opinion must be disclaimed when the auditor cannot obtain
sufficient appropriate audit evidence on which to base the opinion and
concludes that the possible effects on the financial statements of
undetected misstatements, if any, could be both material and pervasive.
10. FORENSIC AUDIT
A forensic audit is an examination and evaluation of a
firm's or individual's financial information for use
as evidence in court and it can be conducted in
order to prosecute a party for fraud,
embezzlement or other financial claims.
11. TYPES OF INVESTIGATION
There are three types of frauds which are corruption, asset
misappropriation and financial statement fraud.
Corruption:
There are three types of corruption fraud:
In a conflict of interest fraud, the fraudster exerts their influence
to achieve a personal gain which detrimentally affects the
company. The fraudster may not benefit financially, but rather
receives an undisclosed personal benefit as a result of the
situation.
Bribery is when money is offered in order to influence a
situation.
Extortion is the opposite of bribery, and happens when money is
demanded in order to secure a particular outcome.
12. Asset misappropriation:
The common feature is the theft of cash or other assets from the
company, for example:
•Cash theft – the stealing of physical cash, for example petty cash,
from the premises of a company.
•Fraudulent disbursements – company funds being used to make
fraudulent payments. Common examples include billing schemes,
where payments are made to a fictitious supplier, and payroll
schemes, where payments are made to fictitious employees
•Inventory frauds – the theft of inventory from the company.
•Misuse of assets – employees using company assets for their own
personal interest.
13. Financial statement fraud:
This is also known as fraudulent financial reporting, and is a type
of fraud that causes a material misstatement in the financial
statements. It can include deliberate falsification of accounting
records; omission of transactions, balances or disclosures from
the financial statements; or the misapplication of financial
reporting standards for example, concealing liabilities in order to
improve any analysis of liquidity and gearing.