In public companies, a committee of non-executive directors that is responsible for oversight of financial reporting, internal and external audits, compliance with regulatory codes, and risk management. This committee enhances accountability, auditor independence, and public confidence.
An audit strategy outlines the general approach and key components of the audit, serving as a blueprint for the audit plan, which details the specific procedures and steps to be taken.
Computer-Assisted Audit Techniques (CAATs) are techniques that utilize computer systems to execute auditing processes, which streamline the traditional audit workflow, enhance accuracy, and improve overall audit efficiency.
An external audit is a review of the financial statements or operations of a company conducted by an independent auditor. It serves as a key measure for shareholders to ensure the accuracy and reliability of financial information.
Internal control encompasses measures that an organization implements to reduce opportunities for fraud or misfeasance. Examples include requiring multiple signatures on documents, enhancing security for stock handling, task division, maintaining control accounts, using special passwords, and handling computer files securely. It is crucial for internal audits to ensure the effectiveness of these controls to instill confidence in external auditors and management regarding the integrity of the organization’s operations.
An observation test involves physical and visual verification by inspection of financial statement items or activities. The external auditor observes and evaluates how company employees conduct various accounting-related tasks such as documenting the existence and valuation of assets, safeguarding assets, approving expense accounts, and counting inventory.
