Advanced audit Essay Example | Topics and Well Written Essays - 4000 words

Advanced audit - Essay Example Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria. A competent, independent person should do auditing. To do audit, there must be information in a verifiable form and some standards (criteria) by which the auditor can evaluate the information. Information can and does take many forms. Auditors routinely perform audits of quantifiable information, including companies' financial statements and individuals' federal income tax returns. Auditors also perform audits of more subjective information, such as the effectiveness of computer systems, the efficiency of manufacturing operations and also some others such as social audit and environment audit1. An illustration about auditing is given below:In this figure summarizes the important ideas in the description of auditing by illustrating an audit of an individual's tax return was prepared in a manner consistent wi th the requirements of the federal internal revenue code. To accomplish the objective, the agent examines supporting records provided by the taxpayer and from other sources, such as the taxpayer's employer. After completing the audit, the internal revenue agent will issue a report to the taxpayer assessing additional taxes, advising that a refund is due, or stating that there is no change in the status of the tax return 2. Question one: Requirement 1: Social and environmental auditing: Environmental auditing is a key component of Environmental Policy. This process is a systematic, objective evaluation of facility operations and practices which is designed to: 1. Verify compliance with environmental regulations, internal policies, and accepted practices. 2. Evaluate the effectiveness of environmental management systems in place. The key findings of a UK survey carried out by the University of Dundee in 1995 under the title "The financial auditor and the environment" can be summarized as follows: - For most auditors "environment" is just another business issue and is treated no Differently from any other area of actual and potential risk. For a small minority, the moral dimensions and the longer-term implications of sustainability do suggest that environmental issues are qualitatively different from other matters. - UK businesses and their auditors generally face an uncertain environmental and legislative climate. It is often very difficult to assess from where the next major issue will emerge. - Most of the big auditing firms have initiated procedures within both their audit manuals/processes and within their training schedules. However, the majority of auditors do not perceive environmental issues as requiring special attention. They are simply part of knowing clients' businesses thoroughly. The International Auditing Practices Committee (IAPC) is finalising a draft of a proposed Practice Statement, which provides guidance for auditors on how to deal with environmental issues in auditing financial statements. Whereas an earlier IAPC draft had a wide scope covering also non-financial audit situations, the draft Practice Statement will probably restrict itself to financial audit issues under the headings (EAAR, 1996): - Consideration of environmental laws and regulations; - Knowledge of the business; - Risk assessments and internal control; - Detection risk/substantive procedures; - Using the work of others; - Management representations; - Reporting. Social audit: To achieve these Policy objectives the company operating affiliates will - Build relationships with people in the host country and especially with people indigenous to areas of operations or exploration. Work continuously to understand the culture and social patterns of the people in the host country and also work especially among the people who are indigenous to ar