Unit 13
Unit 13
Unit 13
AUDITING
Overview
In this unit, students will be learned about the role of auditing as well as basic auditors’
works.
Learning objectives
After this unit, students should be able to:
>> Understand the role of auditing
>> Know about basic auditors’ works and their responsibility
1. SPECIAL
2.
3.
4.
Column A Column B
A. study of a specific unit of an organization for the
1. business risk
purpose of measuring its performance
2. information B. intentional acts that cause misstatement of financial
risk statements
3. financial C. unintentional misstatements or omissions of amounts
audit or disclosure in financial statements
4. compliance D. the professional opinion of an acountant regarding
audit the results of an audit
E. auditors must fulfill responsibilities in all cases
5. operational
where such requirements are relevant, MUST, SHALL,
audit
is required
F. the risk associated with a company's survival and
6. fraud
profitability
G. written by the external auditors, declares that the
7. error annual financial statements present a true and fair view
of the company’s situation
H. an independent evaluation to ensure that an
organization is following external laws, rules, and
8. audit opinion
regulations or internal guidelines, such as corporate
bylaws, controls, and policies and procedures
I. an audit of the financial accounting information of an
9. unconditional
entity to determine whether statements have been
responsibility
prepared according to GAAP
J. the risk that information used to assess business risk
10. audit report
is not accurate
READING 1
AUDITING
Auditing is an accounting function that involves the review and evaluation of
financial records. It is done by someone other than the person who entered the transactions
in the records.
Internal audit
Many corporations, especially the larger ones with complex operations, maintain a
continuous internal audit by their own accounting. They continuously review operating
procedures and financial records and report to management on the current state of the
company's fiscal affairs. These accountants also report on any deviations from standard
operating procedures: that is, the company's established methods for carrying on its
operating and recording functions. The internal auditors also make suggestions to
management for improvements in the standard operating procedures. Finally, they check
the accounting records in regard to completeness and accuracy, making sure that all
irregularities are corrected. Overall, the internal auditors seek to ensure that the various
departments of the company follow the policies and procedures established by the
management.
External audit
Independent auditing is done by accountants who are not employees of the
organization whose books they examine. The independent auditor is almost always a CPA.
His or her clients are generally the owners of the business or their representatives, the board
of directors.
Independent auditors review the business's operating activities; they also examine
financial statements, accounting records, and supporting business papers, usually known
collectively as evidential matters. They do this in order to determine the accuracy,
authenticity, and completeness of the records, all of which are part of the concept that is
expressed as fairness in accounting terminology. The accountant's judgment or opinion on
the fairness of the records is contained in a document sent to the client upon completion of
the audit. It consists of a letter addressed to the client that contains both a scope paragraph
and an opinion paragraph.
Operational audit
An operational audit is the review of any part of an organization’s operating
procedures and method for the purpose of evaluating efficiency and effectiveness. At the
completion of an operational audit, recommendations to management for improving
operations are normally expected. Because of the many different areas in which operational
READING 2
Reading text 2: The role and function of external auditors and do exercises
2.2, 2.3 below
THE ROLE AND FUNCTION OF EXTERNAL AUDITORS
Financial statements are used for a variety of purposes and decisions. For example,
financial statements are used by owners to evaluate management's stewardship, by
investors for making decisions about whether to buy or sell securities, by credit rating
services for making decisions about the creditworthiness of entities, and by bankers for
making decisions about whether to lend money. Effective use of financial statements
requires that the reader understand the roles of those responsible for preparing and auditing
financial statements.
Financial statements are representations of management. When using management's
statements, the reader must recognize that the preparation of these statements requires
management to accounting estimates and judgments, as well as to determine from among
several alternative accounting principles and methods appropriate within the framework of
generally accepted accounting standards.
In contrast, the auditor's responsibility is to express an opinion on whether
management has fairly presented the information in the financial statements. In an audit,
the financial statements are evaluated by the auditor, who is objective and knowledgeable
about auditing, accounting, and financial reporting matters.
During the audit, the auditor collects evidence to obtain reasonable assurance that
2.3 According to text 2 which of the following sentences are true (T) or false (F)
3.1 You are going to listen to the conservation between two colleagues from
an auditing firm. Listen carefully and fill in the gaps.
4.2 Complete the paragraph with the corret words from the box. You will
not use all the words
Complete the table with words and related forms. Then complete the
4.3
sentences below with the correct forms of words from the table.
4.4 Complete the following paragraph with the correct form of the word in
parentheses.
Ideally, a business should use as many internal controls as are consistent with (1)
…………… (EFFICIENCY) operation. Many companies employ their own (2)
…………… (ACCOUNT) to maintain an internal audit. They (3) ……………
(CONTINUE) review operating procedures and financial records and report to (4)
…………… (MANAGE) on the current state of the company's fiscal affairs. These
accounts also report on any (5) …………… (DEVIATE) from standard procedures; that is,
the company's (6) …………… (ESTABLISH) methods for carrying on its operating and
recording functions. The internal (7) …………… (AUDIT) also make suggestions to
management for (8) …………… (IMPROVE) in the standard operating procedures.
4.5 Read the following description of auditing. Choose the best word (A, B,
C or D) to fill each gap.
Auditing is a related but separate discipline to accountancy of which there are two
sub-disciplines; internal and external auditing. External auditing is the process (1) ……….
an external auditor is appointed (2) ………. Outside the organisation to examine its financial
statements and accounting records in (3) ………. to ensure that the records show a true and
fair (4) ………. of the statements and the accountant's compliance to accounting standards
(5)
………. - as Generally Accepted Accounting Principles (GAAP) or International
Financial Reporting Standards (IFRS) in all material respects. The auditors of a limited
company are (6) ………. by the shareholders. Internal auditing aims (7) ……….provide
information for the management of a business entity, and is (8) ………. undertaken by
auditors who are employed by the company, and in some (9) ………. by consultants or
external service providers. The auditor's report is usually (10) ………. brief and indicates
that the financial statements have been audited and also gives the auditor's (11) ……….
about them. The report is attached to the main financial statements published by a company
as a (12) ………. requirement.
1 A. in B. by C. whereby D. which
2 A. by B. through C. via D. from
5. SPEAKING
6. WRITING
1. generally/nowadays/be/is/accepted/it/that/business/every/should/audited.
………………………………………………………………………………………
2. can/system/business/auditors/set up/a/the/reliable/help/accounting/.
………………………………………………………………………………………
3. the/act/financial/upon/information/must/in/the/records/management/the/.
1. The purpose of auditing is for an independent third party to examine the financial
statements of an entity.
………………………………………………………………………………………
……………………………………………………………………………………………...
2. The basic objectives with which auditing is done are: verification of accounts
and statements, detection of errors or frauds and prevention of errors or frauds.
………………………………………………………………………………………
……………………………………………………………………………………………...
3. The audit opinion is intended to provide reasonable assurance that the financial
statements are presented fairly, in all material respects, and/or give a true and fair view in
accordance with the financial reporting framework.
………………………………………………………………………………………
……………………………………………………………………………………………...
1. Nếu kế toán là quá trình cung cấp thông tin về các báo cáo tài chính của công ty
thì kiểm toán là công việc kiểm tra, xác minh tính trung thực và hợp lý của các báo cáo đó.
………………………………………………………………………………………
……………………………………………………………………………………………..
2. Một cuộc kiểm toán độc lập có thể là kiểm toán hoạt động, kiểm toán tuân thủ
hay kiểm toán tài chính.
………………………………………………………………………………………
……………………………………………………………………………………………..
3. Kiểm toán nội bộ chịu trách nhiệm phát hiện sai sót trong hoạt động kinh doanh
và tư vấn cho ban giám đốc về việc kiểm soát rủi ro.
………………………………………………………………………………………
……………………………………………………………………………………………..
4. Kiểm toán nội bộ đóng một vai trò quan trọng trong hoạt động của doanh nghiệp,
tuy nhiên, nhiều chủ doanh nghiệp chưa đánh giá cao vai trò, nhiệm vụ của kiểm toán nội
bộ trong hoạt động kinh doanh.
………………………………………………………………………………………
……………………………………………………………………………………………...
5. Bằng các phân tích, kiểm tra, đánh giá quy trình hoạt động của các phòng ban,
kiểm toán nội bộ đưa ra những lời tư vấn giúp công ty hoạt động hiệu quả hơn.
………………………………………………………………………………………
……………………………………………………………………………………………...