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SYED WAFI HAIDER

Table of Contents
1. Executive Summary .............................................................................................................................. 2
2. Introduction ........................................................................................................................................... 3
3. Samsung Electronics Co. Limited ......................................................................................................... 5
4. SINGER Bangladesh ............................................................................................................................ 5
5. Types of Audit Report........................................................................................................................... 6
6. THE AUDITING FIRMS ..................................................................................................................... 7
6.1.1 KPMG in Bangladesh ............................................................................................................. 7
6.1.2 Samil PwC .............................................................................................................................. 8
7. COMPARISON OF THE AUDIT REPORTS...................................................................................... 8
7.1.1 REPORT FORMAT .................................................................................................................. 8
8. REPORT CONTENT.......................................................................................................................... 10
8.1.1 Introductory Paragraph....................................................................................................... 10
8.1.2 Scope Paragraph ................................................................................................................. 10
8.1.3 Opinion Paragraph .............................................................................................................. 11
8.1.4 Other Matters Paragraph ..................................................................................................... 11
9. Conclusion .......................................................................................................................................... 13
10. References ....................................................................................................................................... 14
11. Resources ........................................................................................................................................ 14

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1. Executive Summary

This report exists to conduct a comparative analysis between the audit reports Auditors report
to the shareholders of two chosen companies home and abroad. The group was asked to choose
a company within the domestic boundaries and another from a different country which belong in
the same industry, find out the key differences between the audit reports to the shareholders
within their annual reports. We conduct two companys audit report and that are Singer
Bangladesh & Samsung. Singer is a Bangladeshi Electronic Company & Samsung Electronics
Co. Limited from Korea. After the initial check, we can see that both of the companys audit
report is unqualified audit report. Both of the company maintained all the requirement of
auditing standard. Singer & Samsung both have true financial statements. There is no fraud
found in the statement of both companies.

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2. Introduction

Auditing is a means of evaluating the effectiveness of a company's internal controls. Maintaining


an effective system of internal controls is vital for achieving a company's business objectives,
obtaining reliable financial reporting on its operations, preventing fraud and misappropriation of
its assets, and minimizing its cost of capital. Both internal and independent auditors contribute to
a company's audit system in different but important ways.

Internal audit serves an important role for companies in fraud prevention. Recurring analysis of a
company's operations and maintaining rigorous systems of internal controls can prevent and
detect various forms of fraud and other accounting irregularities. Business processes need
various forms of internal control to facilitate supervision and monitoring, prevent and detect
irregular transactions, measure ongoing performance, maintain adequate business records and to
promote operational productivity. Internal auditors review the design of the internal controls and
informally propose improvements, and document any material irregularities to enable further
investigation by management if it is warranted under the circumstances. Accordingly, an audit
system is crucial in preventing debilitating misstatements in a company's records and reports. An
important part of prevention can be deterrence, and if a company is known to have an active and
diligent audit system in place, by reputation alone it may prevent an employee or vendor from
attempting a scheme to defraud the company. Strong audit systems can reduce various forms of
risk in an enterprise, the risk of material misstatement in financial reporting, the risk of fraud and
misappropriation of assets, as well the risk of suboptimal management due to insufficient
information on its operations.

Audits help businesses uncover problems and ensure efficiency. The trustee responsibility of the
board of directors translates into five specific reasons why the board must provide for an annual
audit of the cooperatives accounting records-

Ensure records are dependable. Accounting methods should be accurate as well as consistent. An
audit will identify shortcomings in accuracy and consistency. Procedures lacking consistency fail
to be dependable for purposes of analysis and decision making.

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Ensure generally accepted accounting principles (GAAP) have been consistently followed. The
American Institute of Certified Public Accountants (AICPA) has set guidelines, laws or rules in
accounting practices to prepare financial statements. This will allow comparisons with
organizations whose audits also follow standard practices.

Ensure that the disclosure is complete. An audit will help the board of directors ensure that full
disclosure of the financial well being of the cooperative business has been made.

Prevent deliberate misstatement of fact. Misstatement of fact may occur for many reasons such
as to hide poor decisions or to cover fraud.

Ensure the judgment decisions are not unduly biased in favor of management. It is the boards
duty to develop and implement the accounting system and managements duty to maintain the
books.

There are other reasons why an audit may be required. Creditors and suppliers may require an
audit before credit is granted and have an ongoing audit requirement as part of the loan
agreements. Not all policies, practices and procedures are committed to writing. It is vitally
important that companies have a process to ensure that everything stays up to date legal and
actually works as intended.

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3. Samsung Electronics Co. Limited

Founded in 1969 in Suwon, South Korea, Samsung has been one of the most talked about
electronics brand worldwide in the recent times thanks to their smart phone product lines.
Though currently being popular for smart phones and other smart gadgets such as smart TVs,
Samsung has actually served over generations with their consumer electronics products and
home appliances as a reliable brand. Their products ranged from LCD monitors, laptops,
refrigerators, air conditions, washing machines and common small home appliances even light
bulbs, cameras and printers. Samsung has assembly plants and sales network in over 80 countries
worldwide. The company was known as Samsung Electric Industries till the year 1988.
The company has 172.876 Trillion USD worth of Equity. Samsung is listed in the Korean stock
market only and available as GDRs in London and Luxembourg. The foreigners have to invest
directly into the Korean exchange market if they wish to purchase the shares.
Samsung was named as the largest television manufacturing brand in the world in 2006 and the
largest mobile phone manufacturer in 2011.

4. SINGER Bangladesh

SINGER is a world renowned American brand which was founded by Sir Isaac Singer in 1851.
Though their first operation in this area began in 1905, the first shops in Bangladesh (Then East
Pakistan) were set up in 1920. The number increased from 10 to 43 shops in between 1947 to
1960. The operations were mainly controlled from the Pakistan Country office which was in
West Pakistan. The East Pakistan housed only a branch office. The shop number was reduced to
23 after Bangladesh became independent and the branch office was promoted to a country office.
And the products were made available from overseas sources.

SINGER was listed with Dhaka Stock Exchange (DSE) in 1983 and offered 20% of its total
capitalization. In 2001, SINGER is listed with the Chittagong Stock Exchange (CSE) as well.
Although the main business of SINGER was of sewing machines, they started broadening their
product line. Which included Refrigerators, LCD/LED TV, Color Televisions, Furniture, Air
Conditioners, Fans, Washing Machines, Irons, Microwave Ovens, Rice Cookers, Motorcycles,

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Instant Power supply, DVD Players, Room Heaters, Air Coolers, Kitchen Appliances, Net book,
Laptop, Desktop Computers, Generators, Blue Ray DVD Players

5. Types of Audit Report


5.1.1.1 Unqualified Opinion Based
An unqualified opinion means that the report is clean. It is usually expressed when auditors
determine that the financial statements of the organization are presented fairly or give true and
fair view of the entitys operations, in accordance with the applicable financial reporting
framework. An unqualified opinion is an independent auditors judgment that a company's
financial records and statements are fairly and appropriately presented, and in accordance
with GAAP. An unqualified opinion is the most common type of audit report.
It is considered by many professionals as equivalent to a patient's "clean bill of health, hence
the term "clean opinion," Interestingly, there are limitations to the cleanliness of audit reports,
because auditors can merely provide reasonable assurance and can't render absolute assurance on
financial position and performance.

5.1.1.2 Qualified Opinion Based


Qualified opinions are expressed when auditors conclude that they can't express unqualified
opinions, and the effects of disagreements with the organization's management or limitation of
scope is not so pervasive and material as to require adverse opinions or disclaimers of opinions.
It is expressed when auditors take exception to a certain accounting application or are unable to
minimize the risk of potential misstatements by their audit procedures.

5.1.1.3 Disclaimer Opinion Based


When auditors can't express an opinion, they give a disclaimer. This typically occurs when the
organization limits the auditors. For example, the company may, for whatever reason, prevent
the auditors from performing a specific audit procedure. Auditors also may not be able to render
an opinion because of circumstances beyond their control. For example, the audit might have
started after the company completed its inventory processes, which means the auditors did not
actually observe the inventory. Other instances when auditors may not be able to render an
opinion include when books of accounts are not appropriately maintained and when the auditors
are unable to perform procedures they believe are necessary.

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5.1.1.4 Adverse Opinion Based


When there is a conflict between the auditor and the organization's management, and the effects
of this conflict are high enough to impact the decisions of the users of the financial statements,
the auditor may need to take an action more severe than to give a qualified opinion. This opinion
typically states that the financial statements are not representative of the actual position or
performance of the companys finances. The conflict might be based on the use of an accounting
policy that is not acceptable, the method by which they are applied, or the calculation of the
accounting estimates made by the organization.

6. THE AUDITING FIRMS

Both the companies SINGER Bangladesh and Samsung Electronics Co. Limited are audited by
the local network or partner firms of one of the biggest accounting firms in the world, known as
The Big Four (Deloitte, PwC, Ernst & Young, KPMG).
SINGER Bangladesh is audited by Rahman Rahman Huq Chartered Accountants or KPMG in
Bangladesh who are a partner firm of the KPMG in Bangladesh. Whereas Samsung Electronics
limited is audited by Samil PWC, who are the local network of PricewaterhouseCoopers
International Limited in Seoul, Korea.

6.1.1 KPMG in Bangladesh


In 1962, when Price Waterhouse Peat & Co. left Pakistan, one of its former partners joined
forces with two other chartered accountants to form Rahman Rahman Huq (RRH). Over the
years, this firm has built a formidable reputation for providing audit, tax, advisory, and other
business solutions to national and multinational businesses, public sector corporations and
development organizations in Bangladesh. As of 1 January 2006, RRH is the Member Firm of
KPMG International Cooperative (KPMG International) in Bangladesh. For over a decade
prior to that RRH was KPMGs Representative Firm in Bangladesh. KPMG is one of the Big
Four accounting firms in the world today, and Member Firm is the highest level of affiliation
within KPMG. This makes RRH the only Member Firm in Bangladesh of any of the Big Four
accounting firms.

KMG (Klynveld Main Goerdeler) was formed in 1979 by the merger of the Dutch firm
KlynveldKraayenhof & Co, American firm Thomson McLintock, and the German Deutsche
Treuhandgesellschaft.Less than a decade later, KMG joined forces with Peat Marwick to become
KPMG. The name stands forKlynveld Peat Marwick Goerdeler, the last names of Piet Klynveld,

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William Barclay Peat, James Marwick(co-founder of Marwick, Mitchell & Co.), and
Reinhard Goerdeler (chairman of DTG and later KPMG).

6.1.2 Samil PwC


Samil PricewaterhouseCoopers is the Korean network firm of PricewaterhouseCoopers
International Limited (PwCIL).

PricewaterhouseCoopers was created on 1 July 1998 by the merger of the following two firms
1. Price Waterhouse and

2. Coopers & Lybrand

Each of those has historical roots of going back some 160 years.

PricewaterhouseCoopers has earned the best reputation based on their top-quality performance.
Over 3,000 devoted professionals are always ready to provide innovative solutions which enable
their clients to gain competitive advantages in highly volatile circumstances.

For more than 45 years, they have provided industry-focused assurance, advisory and tax
services for public, private and government clients in three areas:

-Audit and Assurance

-Taxation

-Deal Business

As part of a larger network of over 223,468 people in 157 countries, Samil PwC works to
provide clients with the best of their collective thinking, experience and solutions to build public
trust and enhance value for their clients and their stakeholders. Since its establishment in 1971, It
has been the Korean affiliate of the global PricewaterhouseCoopers organization. Samils 250
partners and over 3,700 staff make it the largest professional serviceso rganization in Korea,
more the double the size of the next largest accounting firm. For seven consecutive years, Samil
has been ranked by the Financial Supervisory Service as the best accounting firm in Korea.

7. COMPARISON OF THE AUDIT REPORTS


7.1.1 REPORT FORMAT

Both the reports have the required report title Independent Auditors Report. The one reported
KPMG in Bangladesh addresses who the report is made for, to the shareholders of SINGER
Bangladesh.

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Both the audit reports contain the logo of the accounting firms on the top left corner of the
reports. The report made by Samil PwC for the shareholders of Samsung Electronics Limited,
does not include the detailed address and contact of the CA firm unlike the report made by
KPMG in Bangladesh for SINGER Bangladesh.

The main report made by KPMG in Bangladesh includes the sections Report on the financial
statements, Managements responsibility to the financial statements, Auditors
responsibility, Opinion, Other matters and Report on other legal and regulatory
requirements.

Samil PwCs report on Samsung Electronics Co. Limited consists of sections as Managements
responsibility for the financial statements, Auditors responsibility, Opinion, Other
Matters.
Both the reports include the date, location of the auditing report at the end of the reports
accompanied by the attestation signature of the accounting firms.

Samil PwCs report to the shareholders of Samsung Electronics Co. Limited includes an extra
paragraph at the very end, which states This report is effective as at February 25, 2016, the audit
report date. Certain subsequent events or circumstances, which may occur between the audit
report date and the time of reading this report, could have a material impact on the
accompanying consolidated financial statements and notes thereto. Accordingly, the readers of
the audit report should understand that there is a possibility that the above audit report may have
to be revised to reflect the impact of such subsequent events or circumstances, if any.
This above statement further strengthens and specifies the validity of the audit report and
clarifying their liabilities after the date of the reporting and the report reaching its readers.

Point to be noted, sections such as Managements responsibility and report on financial


statements are a part of the Introductory Paragraph according to the traditional audit report
format and the sections such as Auditors responsibility specifies the scope of the audit, also
known as Scope Paragraph.

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8. REPORT CONTENT

8.1.1 Introductory Paragraph


The introductory paragraphs of both the audit reports consists of Reports on the financial
statements and The Managements Responsibility to the financial statements, which introduces
the reader to the audit. The report made by Samil PwC states that they have audited the
consolidated financial statements of Samsung Electronics Co. Limited along with all its
subsidiaries, which means the whole Group, on the other hand the report made by KPMG in
Bangladesh specifies that they conducted their audit on the financial statements only for
SINGER Bangladesh the company. Introductory paragraphs of both the reports state that they
have also summarized significant accounting policies and other explanations at the end of the
report. The reports hold the respective managements responsible for the proper presentation and
reporting of the financial statements and any kind of misstatement whether due to fraud or error.
It is their duty to maintain internal control in such a way that it ensures fairly presented financial
statements which are free from material misstatements.
The Major difference we find in this portion of the report is, the company being audited by Samil
PwC, Samsung Electronics Co. Limited is expected to report in accordance to the International
Financial Reporting Standards which were adopted by the Republic of Korea, otherwise known
as Korean IFRS. On the other hand, KPMG in Bangladesh states that SINGER Bangladesh is
expected to prepare their fairly presented financial statements with accordance to the
Bangladesh Financial Reporting Standards.

8.1.2 Scope Paragraph


Scope paragraph explains the nature of the audit conducted, which is titled as Auditors
Responsibility in audit reports.
The same difference is found here as the previous portion of the report. Samil PwC performs
their audit in accordance with the Korean IFRS and KPMG in Bangladesh performs their audit in
accordance with the Bangladesh Financial Reporting Standards.
It is also stated in the report that both of these standards require the respective firms to conduct
the audit procedure ethically and plan and perform the audit to obtain reasonable assurance
whether or not the financial statements of the audited is free from material misstatements and
fairly presented.

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The paragraph also includes a brief description of the audit procedures as well as the boundaries
of the process. It also specifies the focus of the audit. Which is to evaluate the internal controls
related to the preparation of the financial statements but not the effectiveness of the entitys
internal control as a whole. It also states that the evaluations have to be relevant, and the auditors
also evaluate the companys accounting policies and the accounting estimates.

At the end of the scope paragraph, both the reports assure its readers that the auditor believes the
audit evidence they have collected are sufficient and appropriate to provide a basis of their
opinion.

8.1.3 Opinion Paragraph


Both Samsung Electronics Co. Limited and SINGER Bangladesh got an un-quailed opinion from
their auditors. Hence, both the reports in their opinion paragraphs state that the auditor believes
all the financial statements of the named company till the date of the audit report are fairly
presented without any material misstatements and they are in accordance with their respective
accounting standards. Which is Korean IFRS for Samsung Electronics Co. Limited, audited by
Samil PwC and Bangladesh Financial Reporting Standards for SINGER Bangladesh, audited
by KPMG in Bangladesh.

8.1.4 Other Matters Paragraph


Here we find a complete difference between the two reports. The other matters paragraph
includes any information that the auditor believes could be significant to the companys
shareholders even after the company gets an unqualified report, to provide further assurance to
the shareholders about the audit.

Samil PwCs report on their other matters section on Samsung Electronics Co. Limited states
that the accounting standards vary among countries and that the standards they followed, the
Korean IFRS might vary from the Generally Accepted Accounting Principles in other countries.

The other matters section of KPMG in Bangladeshs report on SINGER Bangladesh states that
the annual reports of the previous year were audited by a different auditor who had expressed an
unmodified opinion about them, and includes the date of the event.

The other matters section in this report also includes a brief report on legal and other regulatory
requirements. Which states that the auditor also reports on these issues with accordance to The

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Companies Act 1994 and Securities and Exchange Rules 1987. This section assures the
shareholders that the auditors have obtained all the information and explanations which were
necessary according to the best of their knowledge, that they found the company has kept proper
books of accounting required by the law, that all the financial statements of the company are in
agreement with these books of account and finally that the expenditure incurred and the
payments made were only for the purpose of the business of the Company.

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9. Conclusion

All the tasks required by the lecturer for this report have been completed and the proper
explanations of the findings have been properly reported in this report.

This report gives a complete idea about the practical Audit report format. Working on this report
has been very useful for the group to get a clear concept about the audit report format and the
significance of each section of the audit report, aside from the main focus of the report. It also
helped the group to gain more knowledge about the auditing firms, particularly the big four.

The audit reports differ from country to country due to the required accounting and auditing
principles/standards being different in one country from the other. Regardless of that, the audit
report states whether or not the companys financial statements are in accordance with the said
accounting standards.

Even though the accounting and auditing standards differ from one country to another, the audit
reports still follow a common structure which makes it easier for the investors to understand.

Both the companies selected for this report have gotten standard unqualified reports, for which
there are no differences found in the opinion paragraphs of the audit reports made by Samil PwC
and KPMG in Bangladesh.

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10.References

https://www.singerbd.com/company/singer-history.html

https://en.wikipedia.org/wiki/Samsung

https://home.kpmg.com/bd/en/home.html

http://www.pwc.com/kr/ko

http://big4accountingfirms.org/the-top-accounting-firms-in-the-world/

11.Resources
The resources used for this report were the Independent Auditors Report to the shareholders of
the companies, which were found from the Annual reports of the respective companies.
The Auditors reports are attached at the end.

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