Audit Standards in Australia

Questions: In an external financial statement audit: What organization established audit standards in Australia? Who is responsible for ensuring that GPFS are true and fair? Who is responsible for ensuring the integrity and effectiveness of the internal control system? What is the duty of auditor? What is the overall objective of the audit? What is the overall objective of the audit working paper? What are four types of opinion that the auditor might express? Discuss each type of opinion. What is the emphasis of matter paragraph in an auditors report? Answers: (a). Australian Auditing Standard established the audit standard in Australia. The responsibilities of an auditor when he is engaged in any auditing undertaking to prepare a financial report or complete a set of financial statements in the prescribed form and content and there by submitting the report to the Australian Auditing Standard. It is considered as the autonomous standard body, which aims to serve the public interest by setting up high class for auditing and assurance and other correlated standard. (b). The Financial Reporting Council is responsible for ensuring that the GPFS corresponds to a true and fair view of the financial report. The financial reporting council is considered as the pinnacle body who is under the obligation to supervise the efficiency of the financial reporting structure in Australia. The FRC constantly observes the expansion of international accounting and auditing standards which emphasis on the effort to promote the development of a solitary set of accounting and auditing benchmark for universal utilization and endorse the implementation of these standards[1]. (c). Under the internal control and integrated framework, the Chief Executive officer of the organisation has the overall responsibilities for ensuring the integrity and the effectiveness of the internal control. In addition to this, the administration is also answerable to the board of Directors, which makes available the supremacy, leadership and oversight. However, the internal auditor and the eternal auditors of the organisation also gauge the usefulness of the internal control through their efforts. (d). Under the section 227 (1A) the duties of the auditor are defined below which enquires that Weather loans and advances on security have been appropriately protected and the stipulations and conditions, which they have been made, are inappropriate to the interest of the corporation. The duties of the auditor also denotes that weather all the information has been obtained which is mandatory for the purpose of the audit The auditor must denote that financial statement of organizations balance sheet and profit and loss account are adhering to the prescribed accounting rules. Weather the books of account gives a true and fair view of the information which is necessary under the act (e). The major function of audit is to find out that the financial statement, which is prepared by the company, represents true and fair view of the fiscal state of affairs of the business. The overall objectives of the audit are mentioned below; The books of accounts have recorded all the business transactions correctly. There are no errors and frauds in the financial statements The profit and loss account shows the true and fair results of the business operations. The books of accounts must disclose the all the information regarding the revenue, expenditure, assets and liabilities. (f). The overall objectives of the audit working papers are as follows; Audit working papers primary objectives is planning and performance of the audit Audit working paper objectives is to clearly and logically schedule the result and auditing test. The working papers evidence the compliance with the technical standards. Working papers preserve an evidence of matters of systematic significance to potential audits of the entity. (g). An Auditor might express his opinion in the audited statement. The auditing concept states that the auditor should state its opinion, which is in compliance of the generally accepted accounting principles that have been followed during the auditing procedures of the books of account used in the financial accounting year. There are four types opinions expressed by the auditors which are as follows; Unqualified opinion: The incompetent belief has no stipulation in the financial declaration. This is also called as a clear opinion, which defines that the monetary statement appears to be offered fairly. Qualified opinion: This represents that the auditor has undertaken the exemption to a certain present period on accounting functions or it is not capable to recognized the potential conclusion of a substance Disclaimer opinion: This is an extraordinary form of audit statement that should be issued when the auditor authorizes his or her name to be connected with the fiscal statements, which has not been inspected and investigated by the auditor in conventionality with the generally accepted accounting principles. Adverse opinion: This is a form of audit belief, which declares that the fiscal report do not demonstrates the fair monetary position and outcomes of actions along with the modification in the monetary position in agreement with the generally accepted accounting principle. (h). The global standard on auditing ISA is concerned with the auditors contemplation of enclosure in the auditors statement regarding the emphasis of matter paragraph to depict the attention of matters, which is obtainable or released in the financial statements. The auditor determines the implications in accepting the fiscal statements or any other subject matters of the paragraph, which depicts the attentions with reference to any other matter in the understanding of the monetary statement. Reference List Audit and assurance (Australia). in , New South Wales, BPP Learning Media, 2007. Nair, C M Shah,External quality audit. in . Pickett, K,The internal auditor at work. in , Hoboken, NJ, John Wiley Sons, 2004. Pitt, S,Internal audit quality. in . [1] Audit and assurance (Australia). in , New South Wales, BPP Learning Media, 2007. [2] Pickett, K,The internal auditor at work. in , Hoboken, NJ, John Wiley Sons, 2004. [3] Nair, C M Shah,External quality audit. in .