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The management of a newly incorporated company is unsure as to the need for an audit. Your services have been requested to explain to management the concept of auditing.
(a) What is the general definition of an audit? Briefly discuss the key component parts of the definition.
(b) Briefly describe the following types of audit
(i) Statutory audit (ii) Management audit (iii) Internal audit
(c) Discuss the value of external audit to the following users:
(i) Shareholders who want information about a company's performance.
(ii) Management who want to reduce risk and improve performance.
(d) For auditors to give a reasonable assurance that financial statements are free from material misstatements, legislation establishes rights and duties. Briefly explain three statutory rights and three duties of auditors.
(e) Discuss five benefits and five limitations of statutory audit.
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