Systems based audit approach, Auditing

Assignment Help:

Systems Based audit approach

The basis of IAS 400, Risk Assessment and Internal Control.

The term systems audit refers to the typical audit approach to medium and large companies and is based on the assumption that such companies have internal control systems which will hopefully constitute a reliable base for the preparation of the accounts. In other words, the characteristic of a systems audit is an examination of internal control.

We have already established that many small companies cannot achieve satisfactory internal control and it is hence clearly futile for the auditor to seek to rely on controls if they don't exist or are patently unreliable. For such enterprises the auditor has no alternative but to carry out a so called 'substantive audit' involving extensive verification of transactions followed by a detailed examination of the balance sheet (verification of assets and liabilities and review of the financial statements).

The contemporary audit approach to reasonably sophisticated companies is therefore to carry out a system-based audit during the course of the accounting year, followed by a balance sheet audit at the year end - if the systems audit work is successful, i.e. the controls prove reliable, the auditor can use his judgement to reduce the extent of the balance sheet work (in no circumstances will the balance sheet work be eliminated entirely!).


Related Discussions:- Systems based audit approach

Ifrs 5 non-current assets, IFRS 5 Non-Current Assets IFRS 5 Non-Curren...

IFRS 5 Non-Current Assets IFRS 5 Non-Current Assets Held for Discontinued and Sale Operations The Discontinuing Operation is a component of an enterprise: (a)  Such the

Auditors procedures - audit process, Auditors Procedures - Audit Process ...

Auditors Procedures - Audit Process The relevant authority on post balance sheet events is ISA. The preparation of loss and profit account and balance sheet will forever inclu

Intangible asserts, Suppose soyola cooking oil company takes over ZamGold c...

Suppose soyola cooking oil company takes over ZamGold cooking oil for an amount in excess of the value $500,000. A) What intangible assert will Soya create in its books which the a

Attempts at definition of the ''true and fair'' view, Attempts at definitio...

Attempts at definition of the 'true and fair' view There following quotations represent authoritative views on the meaning of true and fair view. A true and fair view impli

Initial identification - intangible asset, Initial Identification - Intangi...

Initial Identification - Intangible Asset Subsequent to initial identification, an intangible asset is carried at: a) Cost, less any accumulated amortization and any accumu

Judgmental sampling, Judgmental Sampling Judgment sampling is where th...

Judgmental Sampling Judgment sampling is where the auditor using his own experience and knowledge of the client's business and circumstances selects the sample to be tested wi

Annotated bibliography, Conducting a critical review of published literatur...

Conducting a critical review of published literature about a topic is fundamental step in developing your research skills. A first step towards a review of the literature is to sea

Auditor-client relationship, describe possible factors in the auditor-clien...

describe possible factors in the auditor-client relationship that can make it more difficult for the auditor to detect fruad

INTANGIBLE ASSET, problems associated with intangible asset audit

problems associated with intangible asset audit

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd