233
Question
Principal aspects to be covered in an audit involves:
(X) Review of system and procedures
(Y) Review of internal control system
(Z) Ensuring statutory compliance
Principal aspects to be covered in an audit involves:
(X) Review of system and procedures
(Y) Review of internal control system
(Z) Ensuring statutory compliance
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Solution
The correct option is D X, Y and Z
Principle aspects to be covered in Auditing
Effective audit is critical to the quality of financial reporting and the proper conduct of business. Thus some of the aspects to be covered when doing audit are.
* First is to understand the system and procedure adopted by the entity.
* Before beginning the auditing determine whether, and to what extent, to use specific work of the internal auditors
* If using the specific work of internal auditors, to determine whether that work is adequate for the purposes of the audit and how effective is the internal control system.
*To check the arithmetic calculations to trace out if any error in the books of accounts.
* To monitor the integrity of the financial statements of the company and any formal announcements relating to the company's financial performance
* Auditor has to ascertain that items of capital nature are identified and differentiated from items of revenue nature.
* Should review the clarity and completeness of disclosures in the financial statements and consider whether the disclosures made are set properly in context.
* A proper adjustment has been made for income and expenditure of a particular period.
* To report to the board on how it has discharged its responsibilities.
* If auditor is not satisfied with any aspect of the proposed financial reporting by the company, it shall report its views to the board.
* Should ensure all statutory compliance related to income tax, companies Act etc. has been complied by entity.
* Should review and approve the statements included in the annual report in relation to internal control and the management of risk.
* Should physically assess all the assets of the entity.
* Should inspect the documents to find whether liabilities have been correctly mentioned.
Principle aspects to be covered in Auditing
Effective audit is critical to the quality of financial reporting and the proper conduct of business. Thus some of the aspects to be covered when doing audit are.
* First is to understand the system and procedure adopted by the entity.
* Before beginning the auditing determine whether, and to what extent, to use specific work of the internal auditors
* If using the specific work of internal auditors, to determine whether that work is adequate for the purposes of the audit and how effective is the internal control system.
*To check the arithmetic calculations to trace out if any error in the books of accounts.
* To monitor the integrity of the financial statements of the company and any formal announcements relating to the company's financial performance
* Auditor has to ascertain that items of capital nature are identified and differentiated from items of revenue nature.
* Should review the clarity and completeness of disclosures in the financial statements and consider whether the disclosures made are set properly in context.
* A proper adjustment has been made for income and expenditure of a particular period.
* To report to the board on how it has discharged its responsibilities.
* If auditor is not satisfied with any aspect of the proposed financial reporting by the company, it shall report its views to the board.
* Should ensure all statutory compliance related to income tax, companies Act etc. has been complied by entity.
* Should review and approve the statements included in the annual report in relation to internal control and the management of risk.
* Should physically assess all the assets of the entity.
* Should inspect the documents to find whether liabilities have been correctly mentioned.
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