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

Company issues, Q. If Kiner Company issues 3,000 shares of $5 par value com...

Q. If Kiner Company issues 3,000 shares of $5 par value common stock for $70,000, the account a. Paid-in Capital in Excess of Par Value will be credited for $15,000. b. Common Stoc

ACL PROGRAME, I have some questions in ACL PROGRAME . IF YOU CAN HELP ME

I have some questions in ACL PROGRAME . IF YOU CAN HELP ME

Non-statutory audits, Non-statutory Audits The non-statutory audits ar...

Non-statutory Audits The non-statutory audits are performed through independent auditors sicne the owners, proprietors, trustees, members  and governing and professional bodie

Fraudulent financial reporting, Fraudulent financial reporting Involves...

Fraudulent financial reporting Involves intentional misstatements or errors of amounts or disclosures in financial statements to mislead financial statement users. Fraudulent f

Skills and objectivity of expert, Skills and Objectivity of Expert T...

Skills and Objectivity of Expert The skills and competence of the expe rt Whether planning to require the work of an expert, so the auditor should assess the professiona

Tangible non current assets, Tangible Non Current Assets The verificat...

Tangible Non Current Assets The verification approach is fundamentally similar in each of these.  Extensive disclosure is utilized in most countries and IAS 16 Property Equipm

Writing an assignment, am happy to pay someone to do my acc assignment whic...

am happy to pay someone to do my acc assignment which is more auditing one

Definition of auditing , Definition of Auditing According to Internatio...

Definition of Auditing According to International Standard on Auditing (ISA) objective and common principles governing an audit of financial statements, the purpose of a financ

What type of sampling plan should the auditors use for test?, In performing...

In performing a test of controls for sales order approvals, the CPAs stipulate a tolerable deviation rate of 8 percent with a risk of assessing control risk too low of 5 percent. T

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