Beginning The Audit Report Essay
Beginning The Audit Report
I would like to thank you for vesting your company and trust in our firm to be your auditors. In this letter an explanation of the general terms and the process of our audit will be defined. This is only an educational purpose letter and is not an agreement.
THE AUDIT PROCESS
An audit is an examination and review of companies financial statements. The examination is performed with a view to portray an opinion of whether the companies financial statements prove a true and fair statues of the company. Auditing the activities of the company will be planned, executed properly and thoroughly reviewed to assure that all statements are in compliance with laws and regulations. The following is the process as to which our firm will be conducting the audit:
We have a strict clientele screening process, once the screening process of the company is concluded and confirms that you’re company is an acceptable client we will proceed with the next step in the process.
Once the screening process is passed we might need to contact the companies previous auditor and have agreed consent from them to proceed. If the previous auditor does not consent or if your company does not allow us authority to contact he previous audit our firm will not perform the audit in your company.
After all consents have been given there will be an audit engagement letter that will be issued to your company, which would represent the agreement between your company and our firm. The agreement would give the fundamental basic terms of the way the audit will be performed and what expectations of the firm and company will be.
Once your company receives the engagement letter, all data will be collected from your company and the environment. The information collected will allow us to identify problem areas from prior audits.
When all data is gathered we will complete a risk assessment of the company so that the best audit approach may be selected.
For low risk companies we may test controls to analyze whether or not the companies internal controls are functioning followed by a smaller set of substantive testing.
If the company is high risk your internal controls are weak, we would will rely heavily on substantive testing in order to make sure that there is no misstatements in the companies accounts.
Whichever approach is chosen the analytical process during different parts of the audit will be the same.
Once the main work is completed we will review the audited work and bring forth any issues to you that have risen from the audit work.
When the issues are resolved (if any), the audit report will be issued. This would conclude our audit process on the companies accounts and statements for the year.
Attached you will find other documents which will give you a better understanding of the audit process. Please if you have any questions please feel free to write to us.
Timeframes for the audit
Introductory letter sent to client
Screening process of client complete
First meeting with client complete
General issues were discussed with client
Consent to contact previous auditor requested
Detailed meeting with client discussing engagement terms held
Letter of engagement sent to client
Changes to scope made (if any)
Letter received by client and accepted
Audit timetable copy sent to client
Directors of Apollo Shoes.
This letter serves as representation that we will act as auditors for Apollo Shoes, therefore responsibility of the company and our firm in all respected areas of the audit.
MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTS
Responsibility of preparation and accurate presentation of the financial statements in accordance with IFRS and SFAS will be held by management. The respected responsibility includes:
Appropriate accounting policies should be selected and applied
Internal controls relevant to the preparing and presenting financial statements should be designed and implemented. Financial reports should be free from misstatements.
Accounting estimates should be made to a reasonable and circumstantial amount
Our firm’s responsibility is to give the company an opinion on the financial statements that are presented to us based on our audit findings. We will review all data collected and ascertain that information and work is in compliance with statutes, regulations, GAAP, SFAS, and IFRS. We will also ascertain that the data is in compliance with the code of ethics for professional auditors (Apra, 2009).
Audit will include the review and examination of all figures and facts on a test basis. Due to the nature of the test there may still be a risk that some misstatements will go undiscovered. In order to reduce risk we encourage and need Apollo to provide and make necessary arrangements relating to the execution of the audit. Our firm will require unrestricted access to all records, documentation and all information requested by our firm. Any representation that the company makes in connection to the audit will be expected to be confirmed and in writing.
When the firm feels that there is sufficient work reviewed and completed by the auditors to establish an opinion, the firm will issue and audit report. The report will be given to the company if all issues and circumstances brought forth by the auditors is resolved by the company.
FEE AND OTHER ISSUES
The firms fee will be charged on a fixed amount of $12,000 plus an additional hourly wage based on the number of hours worked by the firms staff on your companies audit engagement. This additional fee will vary depending on the level of seniority the individual has and time spent. Our firm will issue a management letter, which will focus on the companies weaknesses in the internal control system, which arose from the audit. This letter is a professional courtesy letter and is not a part of the audit.
Please sign this letter and send it back to us. Once signed, this letter will represent the confirmation of the terms of engagement. This letter will remain effective until the letter is superseded, canceled or amended.
On behalf of directors:
TIMEFRAMES FOR THE AUDIT
Gathering of knowledge about client:
Initial analytical procedures
Key evaluation of audit approach
Selection basis of samples
Testing and checking inventory
Testing long-term liabilities
Testing capital and other shareholders’ funds
Testing and verifying non-current assets
Verification of cash and bank details
Final analytical review
Review of post balance sheet events
Application of accounting standards
Issue of audit report
Arens, A.A., Elder, R.J., & Beasley, M.S. (2012). _Auditing and Assurance Services_ (14th
ed.). Upper Saddle River , NJ: Prentice Hall.FASB. (2014).
Apra. (2009). _Auditor Report._ Retrieved from http://www.apra.gov.au/Superannuation/upload/AuditReport_Vn2-Sept.pdf