In 300 words describe:
Who should receive an audit report – the operational management or the top management within an IT organization and why?
an audit report should receive top management within an IT organization.
- The organisation’s management prepares the financial report. It must be prepared in accordance with legal requirements and financial reporting standards.
- The organisation’s directors approve the financial report.
- Auditors start their examination by gaining an understanding of the organisation’s activities, and considering the economic and industry issues that might have affected the business during the reporting period.
- For each major activity listed in the financial report, auditors identify and assess any risks which could have a significant impact on the financial position or financial performance, and also some of the measures (called internal controls) that the organisation has put in place to mitigate those risks.
- Based on the risks and controls identified, auditors consider what management does has done to ensure the financial report is accurate, and examine supporting evidence.
- Auditors then make a judgement as to whether the financial report taken as a whole presents a true and fair view of the financial results and position of the organisation and its cash flows, and is in compliance with financial reporting standards and, if applicable, the Corporations Act.
- Finally, auditors prepare an audit report setting out their opinion, for the organisation’s shareholders or members.
Auditors discuss the scope of the audit work with the organisation – the directors or management may request that additional procedures be performed. Auditors maintain independence from management and directors so that tests and judgments are made objectively. Auditors determine the type and extent of the audit procedures they will perform, depending on the risks and controls they have identified. The procedures may include:
- asking a range of questions – from formal written questions, to informal oral questions – of a range of individuals at the organisation
- examining financial and accounting records, other documents, and tangible items such as plant and equipment
- making judgments on significant estimates or assumptions that management made when they prepared the financial report
- obtaining written confirmations of certain matters, for eg, asking a debtor to confirm the amount of their debt with the organisation
- testing some of the organisation’s internal controls
- watching certain processes or procedures being performed
Our responsibility is to express our opinion on the financial statements of your company based on our audit. We have conducted the audit in an independent and fair manner in accordance with the auditing standards of the United States of America and the standards applicable to financial audits. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.
We have followed the procedures mentioned in our detailed audit plan to collect evidence about the disclosures made in the financial statements and have made the necessary risk assessments based on our judgement and experience. We believe that the evidence so collected during our audit is sufficient to formulate our audit opinion