Audit is an independent examination of financial statements to express an opinion whether financial statements presents true and fair view in all material aspects
There are two types of external audit:
1. Statutory audit
2. Non statutory Audit
It is mandatory by law
Non Statutory Audit: It is not mandatory by law. Companies According to UK law which have turnover More than Pound 4.9m is mandate to conduct a audit
Advantages of Non Statutory Audit
1. Sleeping partners will be more confident about company’s performance
2. The accounts of the companies will be more acceptable to the taxation authorities.
3. Employees will be more confident about their future/career.
1. It may be too costly
2. Employees may get demotivated.
3. Their might be collusion between auditors and management
4. Human error can be made.
Accountability, Stewardship & Agency
Is the quality or state of being accountable, that is being required or expected to justify actions and decisions. It suggests an obligation or willingness to accept responsibility for one’s action.
The duties and obligations of a person who manage’s another person property.
Are people employed or used to provide a particular service. In case of the company directors who manages the company and do contracts on behalf of The shareholders are agents of the company.
An assurance engagement is one which a practiontier expresses a conclusion design
to the enhance the degree of the confidence of the intended users other than the
responsible party about the subject matter information.
Following are the elements of Assurance engagement: