Independence requirements of compliances
There are different activities and factors which are considered by the auditor of an organisation. The elements will be understood and discussed in this reporting the detailed manner. The evaluation and analysis of the key matters the auditors is having will be effectively and appropriately understood in this assignment report. The chosen organisation for this particular study is the Adalta limited; all auditing information regarding this company will be attained in a detailed manner (Al-Baidhani, 2014). There is a high need of understanding the role and responsibilities of the management that they play in a firm; hence the study will also be focusing on this. The opinion and suggestions which are required in the company to better understand the situation and use the data and information in better way could be attained through the auditor’s view. The issues and problem can be discussed and asked from the auditors during annual meets.
The role of an auditor mainly is to audit or to analyse all the working and operations that is get done in context to the financial aspect of the business. The auditors are checking and determining each and every aspect regarding the financial accounts so that the drawbacks and pitfalls can be analysed. With this the organisation can be able to know the area where it needs to concern more in the future and how they can manage the operations and financial factors. The report is been prepared by the auditors where all the detailed information will be presented regarding the company’s position in terms of money and finance (Austin & Herath, 2014). The auditors are not forced or restricted to only make what the company wants. The reporting is done wholly by the auditors; there is no role of any other person.
The auditors find what so ever policies will be best suitable for the company as per the attained data; they are free to introduce any policies for company’s improvement and growth. The accounts and financial reports could be able to get prepared by the accountant and finance manager appropriately and effectively with the opinions and the analysis attained by the auditors as well. The mistakes, fraudulent acts, errors all can be easily be able to get determined by the auditors of the company. This will help the organisation is able to understand the area where it needs to improve and have to be more focused along with this the decisions can also be made in an appropriate manner in the future. Only auditor is responsible in making and reporting there will be no involvement of any person other than auditor can take part in auditing.
The Adalta limited is opting and utilising the best method where there is no dependency as the auditors are availed their proper space and time for the auditing activities in the appropriate and effective manner.
The non-audit services are those activities and tasks which are very important but are not considered to be the part of audit services. These services are assisting the auditors to make more reliable and valid results upon which the company can trust. The auditors are responsible in making and preparing the non-audit services in the company also. The management of the company is making and performing and making the non-audit services. There are various types of operations and activities which will be helping the company to perform well in their financial functions (Clikeman, 2018). The remuneration is also paid to the auditors for the services which are done by them for the business. It is very useful and important for the company to carry out the work in the proper and in a systematic manner. Adalta company is using the remuneration and payment system which is availed to the auditors for all the services which are been done by them.
Non-Audit services and nature of services
The auditors are to be remunerated for the services which is been done by them for the company. It is very important for the company to avail payment for the work that an auditor is doing for the company. The services that they are doing are providing suggestions and different options that company can use to carry out the work in the appropriate manner. For this it is highly required that the company must use and pay the remuneration to the auditors. The audit as well as the non-audit transactions will be included in this remuneration system. The payment system will be made as per the policies and the norms of both the company as well as the auditors.
Source- (Adalta limited, 2018)
The changes which have been taken place in the company while remunerating to the auditors has been presented on the table above. It can be understood form the information availed in the table that the other services that is the non-audit services are not yet performed in the current year. This is showing a decline in the audit fees of the auditor in total remunerations. As per the data the decline can be seen of 14.12% in the remuneration system that is been paid by the company to the auditors for all the auditing and non-auditing services which is been done by them (Adalta limited, 2018).
Every business is having one of the other activities which has to be recorded, the transactions do takes place in every organisation which has a very important role in the company to perform appropriately and in effective manner. The auditors are analysing those done transactions which the company does and also determining the way the operations and analyse the ways used to carry out the transactions (Herda and Lavelle, 2014). There are some of the factors and elements which can be determined by the auditors are as below-
Equity and structure of capital- The Company has done with several trading and transactions in the current year. There were several options made which have been understood to be an issue for the shares. Therefore, it has been understood that the issues and problems have to be resolved by identifying the actual root cause and to determine the ways to do its treatment in the accounts of the company. The confirmation is also very important to be attained for the accounting and financial transactions of the company.
Intellectual property rights- The Company’s intellectual properties are all those things which is availing and providing the worth and value for its existence in the market. It is highly being protected against any fraud and illegal acts (Herda & Lavelle, 2014). The Adalta Company is taking in consideration about the agreements and contracts which all are related to the IP (Intellectual property). There are different processes that are used by the company to deal with the rights issues and related problems. The claws and norms which the company are into with the IP are also been analysed and verified so that the actions done in the firm are legal and ethical can be evaluated by the auditor of the firm.
Auditor’s Remuneration
Deferred taxation–It is very important for the company to maintain a proper record of all the transactions as account so that at time of making the tax the facts and figures could be able to get analysed in an effective and appropriate manner. The assumptions are to be considered which are highly related to the tax calculations. All the related factors and elements for the tax calculation are effectively and appropriately are verified so that it can be able to make the taxation process easy and very valid to the further actions (Habib, 2012). There is a high requirement of following the proper procedure while preparing the tax report of the company
Tests of Control: The auditor requests to administration and staff about the controls set up at the administration association to decide some applicable data. This technique is regularly utilized related to other, more dependable strategies. For instance, an auditor may ask of administration if guests to the server are escorted constantly if the examiner can’t watch this action while on location.
Substantive tests of detail: Substantive testing is an audit procedure that takes the money related report and supporting documentation to check whether they contain bug or mistakes. Substantive testing is necessary as verification to help the explanation that the finance related records of a substance are exact, and valid.
Analytical procedures: Analytical techniques are used as a substantive test to get evidential issue about particular confirmations related to account changes or classes of trades. The informative technique can be more useful or beneficial than the opening of natural components for achieving particular substantive testing goals
The audit committee are very important element of the company for making the auditing actions in an appropriate manner. Also, with the help of this the company can be able to perform all its activities and functions in the right and legal manner without frauds and mistakes. The need of audit committee is very high and important for the company as this will be helping the firm to make a proper audit reports that will help in taxation process as well. The company’s directors are highly responsible for this committee formation (Saputra, 2015).
The Adalta Ltd Company is also involved in the audit committee which has been made so that the company can be able to attain right and authenticated audio information by the auditor. Executives and directors are involved in this so that the proper and effective process of auditing can be getting performed in the company. Different steps and actions are involved in the process of auditing and this is highly controlled and regulated by the committee members of the company’s audit team (Tepalagul & Lin, 2015). It is very important for the company and the management to take in consideration about the facts and information that the auditor is looking over at time of auditing.
The opinions nd the suggestiona that is been avaioled by the company is said to be as the audit opinion. The decisions and the ourcomes that is been attained from the analysis made by the company’s auditors are having some suggestion that auditor will be availing. There are different opinions that is been given by the auditors which helps in attaining effective operations and activities. The opinions will be aiding the company to take corrective actions an also helps in making appropriate and required plans and strategies tfor the future (Tian & Xin, 2017). The Adalta company is effectively using and executing the opinion and suggestions tghat is been provided to them as this will enhnace the productivity and proficiency of the employees. The needs and companies requirements will alo be able to get managed and handled in the appropriate and required manner.
Key Audit Matters
There are various responsibilities and roles which the company’s management need to understand and perform appropriately. All the planning and eexecution activities are able to get attained by the o0rganisation’s management team. It is very important for the management to manage all the operational and functional activities involved in an organisation. The p[olicies and norms of the business are also been prepared by the company (Ziaee, 2014).
The responsibility of an auditor is to do the evaluation activities and operations of the company’s financial aspects. They are highly responsible to understand and identify the risk and uncertain factors that will be influencing the company (Eccles and Krzus 2012). The controlling and transactional activities done in an organisation is been analysed appropriately with the help of an auditor in a company.
The company is carrying out different operations and transactions which are very important and necessary to be understood and analysed by it. There are activities which many times takes place after the financial or accounting year. These are the transactions which are understood as subsequent event. It is very important to keep the records and maintain all the information in a systematic and proper way. The treatment for the activities performed after has also to be done in the appropriate and effective manner (Tian & Xin, 2017). The evaluation of the transactions will be done in an effective and appropriate way so that the further decisions can be able to get done properly. The Adalta Company is also doing proper execution of the subsequent events as that right and accurate transactions could be able to get maintained by the firm. This is important for the company and the management to perform smooth and appropriate operations.
The information and data gathered and attained by the auditors are helping the company in an effective and appropriate manner. There is high level of impact on the operations and transactions of the company on it as well as its stakeholders. Henceforth, the information and knowledge about the material information is highly being required in an effective manner. All the decision and choices have to be made as per the needs and requirements of the business and the material information available. The taxation process will also get managed and handled in the appropriate manner with the use of material information (Ziaee, 2014).
The attained information has to be managed and handled in the effective and appropriate manner. The data is very helpful in making several decisions and operations of the company. The investors will also be able to use and understand the data to know about the company’s position. Therefore the material information is very useful and beneficial. The employees and management both can cooperatively manage and work, also they could reach to their prime objectives.
The reports and management information which the company prepares are having all the details of the data which are required for the process of evaluation and analysis. Many a time it happens that the company misses the data and information which has to be recorded in the transactions. This will create problems and issues to the company in its accounts and financial records. The problems can be managed if the management will identify the missing data (Saputra, 2015). The disclosures are made very properly and appropriately by the Adalta limited. The estimations and assumptions are made for several things so that the operations and activities can be able to get performed in an effective and appropriate manner. The lacking in the calculation may get arise if the appropriate functioning is not getting done.
The follow-up are very important for the company as with the help of tis the information can be attained more in respect to the financial and accounting aspects. There are some questions for follow-ups they are-
- How the risk assessment methods can be used?
- How the materiality can be determined in the effective and required manner?
- What are the deviations that have been found?
- How the disclosure can be managed and handled in the appropriate required manner?
Conclusion
From the discussion of the subjective aspect, it can be concluded that the all the factors considered in the audit are to be well understood and performed in every organisation. The need of an auditor in tax and other activities of the business are very high as with the opinion and recommendations of them the company can further take appropriate and reasonable steps. The independency to the auditors has to be availed by any business so that the biased and wrong information could be avoided. The policies and suggestions that is been provided by the company’s auditor has to be effectively adopted so that the firm can manage and work in the ethical and appropriate manner. The suggestions given by the company has to be understood and determined by the management of the firm so that the mistakes and errors in future can be avoided. The firm will be making proper follow ups as per the requirements of the company.
References
Adalta limited. (2018) Annual Report. [Online] Adalta limited. Available at: https://1ad.live.irmau.com/irm/PDF/1384_0/AnnualReporttoshareholder. (Accessed: 15th September, 2018)
Austin, E., & Herath, S. K. (2014) Auditor independence: a review of the literature. International Journal of Economics and Accounting, 5(1), PP.62-74.
Clikeman, P.M. (2018) Managers’ and Auditors’ Responsibilities for Evaluating Going Concern, Journal of Corporate Accounting & Finance, 29(1), PP.107-116.
Eccles, R. G., Krzus, M. P, (2012) Integrated reporting requires integrated assurance.
Habib, A. (2012) Non?audit service fees and financial reporting quality: a meta?analysis. Abacus, 48(2), PP.214-248.
Herda, D. N., & Lavelle, J. J. (2014) Auditing Subsequent Events: Perspectives from the Field, Current Issues in Auditing, 8(2), PP. 10-24.
Saputra, W. (2015) The Impact Of Auditor’s Independence On Audit Quality: A Theoretical Approach, International Journal of Scientific & Technology Research, 4(12), PP.348-353.
Tepalagul, N., & Lin, L. (2015) Auditor independence and audit quality: A literature review, Journal of Accounting, Auditing & Finance, 30(1), PP.101-121.
Tian, J., & Xin, M. (2017) Literature Review on Audit Opinion, Journal of Modern Accounting and Auditing, 13(6), PP. 266-271.
Ziaee, M. (2014) The effect of audit quality on the performance of listed companies in Tehran Stock Exchange, International Letters of Social and Humanistic Sciences, 21, PP. 36-43.
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