Audit & Assurance: Internal Control Deficiencies - Essay Example

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Audit and assurance entail the review of an organization’s financial statements, as well as transactions in order to ensure that reporting has been done in accordance with the required standards. The review is mainly conducted by certified public accountants who carry out…
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Audit & Assurance: Internal Control Deficiencies
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Download file to see previous pages When conducting an audit, an organization can procure the services of external auditors and at the same time rely on internal auditors employed by the organization.
EFS (Emerald Fitness Studio) deals with the sale of fresh foods and beverages and operates a chain of several stores. This report provides a case analysis of a company known as Emerald Fitness Studio. The report will also highlight various issues related to internal controls in the organization. In addition, the report will highlight the concept of risk based audit and how it can be used to solve the problems affecting EFS. Another issue discussed in the report is the various elements of internal control, as well as the roles of auditors and statutory auditors.
Risk-based audit is an approach that is widely used in the audit process of an organization. This concept refers to an approach used in the entire audit process with the sole aim of addressing the timing, nature, as well as audit procedures, especially in areas that are considered to have a financial risk in the company statements. With this approach, auditors ensure that they can easily identify material misstatement in the reports of the company. According to the proponents of this approach, the auditor should have an understanding of the organization, as well as the environment in which it operates. This way, auditors can possibly gain an understanding of risks within the organization that can cause material misstatement. After the risks have been identified, the auditor then assesses them with due consideration of the internal controls within the organization, the risks and their nature, as well as the audit evidence required to conduct the audit process (Khwaja et al 2011, p.11).
During a risk-based audit process, the auditor gathers full information on the control environment and the organization’s culture and how it affects operations. Moreover, the auditor has to understand how the ...Download file to see next pagesRead More
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