Auditing Assignment 1
Assignment 1
Name: Leung Hiu Ting
Student no.10348622
Course : Auditing
a. Outline the main reasons for a company requiring an external audit.
Nowadays, a lot of company’s ownership and management is separated. It had major influences for auditing. Shareholders were concerned that their funds may not be used in proper ways to maximize the value of the company by appointed managers.
For example, management may distort or withhold material information in their financial statements for personal gain, there is a need for shareholders to monitor and control the managers in order to discourage such self-interested behavior. Stakeholders can be influenced greatly by an audit. It may mean the difference on the company getting a bank loan or for an investor to bring in capital.
The external audited financial statements were expected to provide some opinion to the reported earnings in the financial statements prepared by management which are within legal regulation and GAAP.
b. Discuss the external auditors’ right and duties as governed by Companies Ordinance.
For the right of auditors, auditors may request company to provide all information of which management and, where appropriate, those charged with governance are aware that is relevant to the preparation of the financial statements such as records, documentation and other matters. Additional information that the auditor may request from management and, where appropriate, those charged with governance for the purpose of the audit. Unrestricted access to persons within the entity from whom the auditor determines it necessary to obtain audit evidence.
The primary duties of an audit is to review and verify the company's financial statements to form an opinion about the company's financial statements. They may give a qualified, unqualified, adverse opinion or even a disclaimer. Each one of these opinions can be vital for an organization. These opinions state whether the financial information was justly represented,
Name: Leung Hiu Ting
Student no.10348622
Course : Auditing
a. Outline the main reasons for a company requiring an external audit.
Nowadays, a lot of company’s ownership and management is separated. It had major influences for auditing. Shareholders were concerned that their funds may not be used in proper ways to maximize the value of the company by appointed managers.
For example, management may distort or withhold material information in their financial statements for personal gain, there is a need for shareholders to monitor and control the managers in order to discourage such self-interested behavior. Stakeholders can be influenced greatly by an audit. It may mean the difference on the company getting a bank loan or for an investor to bring in capital.
The external audited financial statements were expected to provide some opinion to the reported earnings in the financial statements prepared by management which are within legal regulation and GAAP.
b. Discuss the external auditors’ right and duties as governed by Companies Ordinance.
For the right of auditors, auditors may request company to provide all information of which management and, where appropriate, those charged with governance are aware that is relevant to the preparation of the financial statements such as records, documentation and other matters. Additional information that the auditor may request from management and, where appropriate, those charged with governance for the purpose of the audit. Unrestricted access to persons within the entity from whom the auditor determines it necessary to obtain audit evidence.
The primary duties of an audit is to review and verify the company's financial statements to form an opinion about the company's financial statements. They may give a qualified, unqualified, adverse opinion or even a disclaimer. Each one of these opinions can be vital for an organization. These opinions state whether the financial information was justly represented,