Task Audit

UNESUM
Name: Scarlet Rossemary Bueno Intriago
Teacher: Ing. Shirley Marianela San Lucas

Marcillo
Course: Fourth “B”- morning
Career: Accounting and Auditing
Date: May 27, 2021

Auditing
There are few words for an accountant, which cause as much concern as the word
‘audit’. Audits, whether internal or external, carefully study the accountants work and
identify any errors or abnormalities.
In large firms audits are often used as a control for the work of the accounting
department, in these firms the accounts departments may deal with millions of dollars a
month and without a control process in place there would be no way of verifying that
the information produced was correct and that the company wasn’t being defrauded.
These internal audits can take one of two forms, either being carried out by the CFO and
his team or by a specially commissioned external firm of auditors. The second option is
by far the most popular as it ensures objectivity in the audit.
In either of these forms, the auditors are responsible for confirming the validity of the
records produced by the accounting department. This can be done by cross-checking the
accounts workings with the source information, although in larger firms this can be too
time consuming. In these cases statistical sampling, in which a random sample is
checked can provided reasonable proof of accuracy.
These audits may be financial or managerial in nature, in that they can confirm the
workings of the financial accounts or of management accounts.
The primary function of these audits is to demonstrate that the company is following all
expected standards whether they be accounting or production. Each department can be
audited to confirm that they adhere to set procedures and to ascertain that each process
is as described.
As the auditors are acting on behalf of the management board of the entity all findings
are kept in strict confidence and are only shared with the management board and any
stakeholders, who then interpret the results and act on the recommendations of the
auditors.
External audits confirm the entity’s legal obligation to pay certain taxes and duties. In
the US this may be done by the IRS.
These audits cause both accountants and senior managers large amounts of stress as
the outcome of the audit can determine the future of the company being audited. Of
course, not all companies are audited every year.
The IRS choose the companies and individuals to be audited based on a series of
indicators including the level of income with both very high and low levels of income
having the potential to cause an audit, comparative studies of your past years return and
that of your competitors, dramatic changes in income, incomplete or sloppy tax returns,
and a high number of itemizations or charitable contributions.
Once a company has been chosen for an audit, you are notified by mail informing you
of the type of audit: mail by post, office at an IRS office or field in the tax payer’s
premises. You will also be informed what documentation will be required.
The auditor’s duty is to confirm that the information which was submitted in the tax
return is true and that the methods of accounting comply with accounting standards. The
auditor’s findings are then shared with the IRS who will act on it.
Publicly traded companies are treated slightly differently in auditing. The focus is on
providing transparency to ensure investor confidence; this is done by imposing
criminal status to the filing of incorrect financial documentation.
In the US, government auditing is not only a process of confirming a tax liability but
also a method of establishing the performance of a non-profit organization (NPO).
These performance audits may include such checks as whether the NPO is making
sound investments, purchasing the correct goods and a fair price and that employees of
the NPO conduct themselves in a way reflecting the organizations best interests.
Reading Comprehension Questions
An audit controls the work of the accounting department and looks for abnormalities.
True
False
By validating the records produced, the auditor can verify if the company was
defrauded.
True
False
An accountant needs to adhere to set procedures to avoid a sloppy outcome.
True
False
Write 20 Vocabularies the text
Words Translation Meaning

1. Accountant Contador Person who keeps accounting records.
2. Audits Auditorías Inspection of a company's accounting.
3. Defrauded Defraudado Disappoint a person.
4. Commissioned Encargado That takes care of a thing.
5. Ensures Asegura Make something secure.
6. Objectivity Objetividad Be impartial.
7. Statistical Estadístico Person or method of statistics.
8. Sampling Muestreo Previous division of the study
population.
9. Random Aleatorio Process to choose something at random.
10. Proof Prueba Fact or evidence.
11. Accuracy Exatitud Fidelity and complete adjustment of a
data.
12. Managerial Gerencial That belongs to the management)
(administer, control).
13. Adhere Cumplir Carry out a responsibility.
14. Ascertain Averiguar Inquire about something.
15. Behalf En nombre
16. Amounts Cantidades Numerical values.
17. Sloppy Descuidado Not interested.
18. Tax Impuesto Related to the action of imposing or
value to pay.
19. Itemizations Desglose Action of breaking down, separating
something.
20. Charitable Caritativos Who feel charity to help others.
21. Purchasing Compras From the activity of buying, acquiring
something.
22. Employees Empleados Person who works for another.
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UNESUM

Name: Scarlet Rossemary Bueno Intriago

Teacher: Ing. Shirley Marianela San Lucas

Course: Fourth “B”- morning

Career: Accounting and Auditing

Date: May 27, 2021

Reading Comprehension Questions

Write 20 Vocabularies the text

Words Translation Meaning

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