Explain the purpose and content of a statutory audit report. Explain what recommendations you would make to the case study business
Statuary and Non- Statuary audits
In most countries, audits are required under national statute in the case of large no. of undertakings, including the followings
Undertakings Principal Legislations
Limited Companies The companies' ordinance 1984
Corporative societies the societies Act 1927
Banking Companies Banking Companies ordinance 1962
Modarbas The modarba Co. and Modarba flotation
And control ordinance
Other organizations and entities requiring a statutory audit may include charities investment business, trade unions etc
Non-Statuary audits are performed by independent auditors because owner, proprietors
Members, trustees, professional- Governing bodies or other interested parties want them rather than because the law requires them auditors may also give an audit opinion on statements other that annual accounts including
- Summaries of sales in support of statement of royalties
- Statement of expenditure in supports of applications for govt. grant.
- Circulation figures of a newspaper on magazine
In all such audits the auditors must take into account any regulations contained in the internal rules or constitution of the undertaking. E.g. of regulation which the auditors would need to refer to in such assignments would include.
- Rules of clubs, societies and charities
- Partnership agreements
In statuary audit auditor give two types of audit opinion in audit report.
In which auditor is successful in finding evidences that supported that financial statements are materially miss tatted in this case auditor qualifies report.
In this case auditor does not qualify report because he did not find any evidence and financial statements are fairly represented.
In this case study business auditor will give an unqualified opinion but he will classified weakness of interim of control and suggest the remedies in management latter. David and Linda will take notice of it if when auditor's opinion is going to be
1- Affected in case recommendations are not followed.
2- If recommendation are taken and benefits are higher that cost of it.
Auditor will give unqualified opinion; little mistakes will be cancelled without management and auditors dispute.