Audit

An audit is an unprejudiced assessment and assessment of the fiscal summaries of an association.

Types

There are various sorts of audits that can be directed, including the accompanying:

- Compliance audit.

- Construction audit.

- Financial audit.

- Information frameworks audit.

- Investigative audit.

- Operational audit.

- Tax audit.

Main Connection between Audit, Attestation, and Assurance Services

Auditing, bear witness to, and confirmation administrations incorporate a similar procedure: the

assessment of proof to decide if data has been recorded and introduced as per a foreordained

arrangement of criteria, together with the issuance of a report that demonstrates the level of

association. Confirmation incorporates stand witness to, which envelops audit.

Auditing- Auditing is a regular procedure of without bias obtaining and evaluating proof

regarding subject matter about economic events and measures to determine the level of

correspondence among those subject matter and established criteria and communicating the

results to interested users. “Systematic” implies that there should be a well-planned and thorough

approach for conducting an audit. The sort, amount, and dependability of data will vary between
audits, but the course of obtaining and evaluating proof makes up the majority of the auditor’s

activities on any audit.

Attestation- Attestation services occur when a practitioner is engaged to issue a report on the

subject matter, or an assertion about the subject matter that is the responsibility of another party.

This is broader because it is not limited to economic events or actions.

Assurance- Assurance service allows reporting not only on the reliability and credibility of

information but also on the significance and appropriateness of that information. Assurance

services are independent professional services that improve the class of information, or its

context, for decision-makers. It can take in exactly any service provided by accounting

professionals that contains absorbing information, improving its value, or enhancing its

helpfulness for decision-makers.

Basic Concepts in a Financial Statement Audit

Three fundamental concepts motivate the audit process, are

1. Materiality:

Materiality is the threshold or the magnitude of a misstatement that will likely affect the user’s

decision. How material or serious a misstatement is relative to and in the background of the

financial statements.

2. Audit risk:

Audit risk is the risk that the auditor gives an incorrect audit judgment.
3. Audit evidence:

Audit evidence relates to the information gathered and work done by the auditor to gain

reasonable assurance on the fairness of the financial statements.

All three concepts revolve around the management’s assertions. Management assertions is

spoken or implied claims by the management, about the information reflected in financial

statements. The auditor is unable to study every transaction due to time, costs and resource

constraints. Sampling is a technique used by the auditor to select items in a population to

examine. The higher the desired level of assurance, the lower the materiality, the greater the

amount of audit evidence required, and thus, the larger the sample size.

Five essentials of an Effective Audit Planning Process

The main steps in an effective audit planning process are,

- Investigate the Audit area. It is important to know the business policy or reason to be

audited.

- Keep Open Communications completely through the Planning Process.

- Conduct Process Walk-Through.

- Map Risks to the Organization, Process, or Function.

- Obtain Data Prior to Fieldwork.

There are six definite steps in the audit process that

1. Asking Financial credentials.

2. Making an Audit sketch.

3. Setting up an Open discussion.

 4. Performing Onsite Fieldwork.

5. Preparing a summary

6. Setting up a Closing Discussion.

Generally Accepted Auditing Standards (GAAS)

Generally accepted auditing standards (GAAS) are a set of methodical plan used by auditors

when conducting audits on companies' financial records, ensuring the accuracy, consistency, and

testimony of auditors' measures and news. The Auditing Standards Board (ASB) of

the American Institute of Certified Public Accountants (AICPA) shaped GAAS.

GAAS Requirements

Generally accepted auditing standards (GAAS) comprises a list of 10 standards, separated into

the next three sections:

I. General Standards

1. The auditor should have sufficient technical training and expertise to execute the audit.

2. The auditor should sustain independence in mental attitude in all matters linking to the

audit.

3. The auditor should work out due professional care in the performance of the audit and the

training of the auditor's report.

II. Standards of Field Work

1. The auditor must adequately plan the work and have to properly manage any assistants.
 2. The auditor should get a enough understanding of the entity and its environment,

including its internal control, to assess the risk of material misstatement of the financial

statements whether due to error or fraud, and to design the nature, timing, and extent of

further audit procedures.

3. The auditor must obtain sufficient appropriate audit evidence by performing audit

procedures to afford a reasonable basis for an opinion regarding the financial

statements under audit.

III. Standards of Reporting

1. The auditor must state in the auditor's report whether the financial statements are

presented in accordance with generally accepted accounting principles.

2. The auditor must identify in the auditor's report those circumstances in which such

principles have not been consistently observed in the current period in relation to the

preceding period.

3. If the auditor determines that informative disclosures in the financial statements are not

reasonably adequate, the auditor must so state in the auditor's report.

4. The auditor's report must either express an opinion regarding the financial statements,

taken as a whole, or state that an opinion cannot be expressed. When the auditor cannot

express an overall opinion, the auditor should state the reasons in the auditor's report. In

all cases where an auditor's name is associated with financial statements, the auditor

should clearly indicate the character of the auditor's work, if any, and the degree of

responsibility the auditor is taking, in the auditor's report.

A social enterprise can go beyond with social innovation, which is a phrase that describes

a business ruling inventive ways to tackle social wants. Whether through the services they

deliver, their employment practices, or through their other activities, today's businesses have an

impact on society. Being socially responsible creates good will and a positive image for the

business. Trust and a good reputation are some of the company’s most valuable assets. In fact,

without these, you wouldn’t even have a business.

Reference

10 Generally Accepted Auditing Standards (GAAS). (2014, October 23). Retrieved from

https://www.youtube.com/watch?v=K6NWyggTxR0

The 10 Fundamental Generally Accepted Auditing Standards (GAAS). (2018, 3). Retrieved

from https://businesszeal.com/generally-accepted-auditing-standards

Generally Accepted Auditing Standards (GAAS). (2003, November 19). Retrieved from

https://www.investopedia.com/terms/g/gaas.asp

Why Social Needs To Be At The Center of All Business in the 21st Century. (n.d.). Retrieved

from https://www.linkedin.com/pulse/why-social-needs-center-all-business-21st-

century-geoffrey-colon