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External Auditing Process and Its Stages Assignment Sample

Introduction

Money has always been the primary means of ensuring the continuation of society and the relationships between various manufacturers, and there is no use in disputing this. As the standard by which the worth of a particular good may be assessed, it assisted people in determining their pricing structure, which was crucial for the profitable trade of goods. Furthermore, it is clear that this built system evolved alongside society, gaining new characteristics and growing more complex. The establishment of banks and the growth of this industry both made significant contributions. In light of this, it is feasible to assert that the contemporary financial system appears to be both highly efficient and complex. Due to its dependence on the primary contributors, a number of financial institutions, it had to develop a particular mechanism that would shield it from numerous speculative risks (Millichamp & Taylor 2012). Because of this, a cure known as an audit was developed and introduced. The given remedy's primary objective is to keep an eye on the financial health of every business that operates in relation to a nation's financial system (Millichamp & Taylor 2012). Additionally, it ought to guard against several failure causes for this specific business. Based on these data, it is possible to acknowledge that this treatment has grown to be one of the most significant problems in the modern world.

Importance of the Issue

It is impossible to discuss the audit without bringing up how it affects how various organizations operate and how crucial it is. First of all, it is feasible to assert that frequent audits of various entities are a guarantee of the financial system of any state operating steadily (Planning the external audit n.d). Numerous possible infractions or errors that could be discovered throughout the audit process could have a major negative impact on a company's and state's revenue (Meaning And Objectives Of Periodical Audit Or Final Audit Or Complete Audit n.d.). This truth has the potential to harm all agents. Large entities should provide financial statements so that they can be examined and verified with this in mind. These remarks are typically found in a select few organizations. Owners, vendors, employees, and other parties are what are referred to as stakeholders (Millichamp & Taylor 2012). Therefore, numerous audit agents could demonstrate the veracity of these specific financial accounts. This check's primary objectives are to ensure that stakeholders receive reliable information and that the financial plan has not changed (What is the difference between internal audit and external audit? n.d.). It should be noted that one of these solutions, the external audit procedure, is employed to conduct an audit for significant organizations.

Eternal Audit

Considering these details under the auditing assignment, it is clear that external audit is crucial in the current environment. First and foremost, it should be clarified that the word "external audit" refers to a periodic or specific audit carried out by an external (external) accountant (Handling an external audit n.d). It implies that a person who is unbiased and independent of the company analyses the financial aspects of its operation. Finding out if the financial accounts are true and reflect the actual situation is the major objective of this exact method. It is evident that it is a lengthy, intricate process that calls for specific processes (Assessing the effectiveness of the external audit process 2013). Keeping this in mind, the process is always broken down into two steps. The first one, referred to as an interim audit, examines plans and financial data. The second stage, sometimes known as the final audit, focuses on the financial accounts and is typically carried out following the end of the accounting period. These two phases, which are both crucial for a thorough review of a company's operations, aid in understanding the key components of the external audit process, which calls for more research.

Interim Audit

It should be noted that the study of a company's goals is the first step in the typical interim audit procedure (Meaning and Objectives of Interim Audit n.d.). The primary objectives of a corporation should be taken into consideration by a skilled and independent agency to see if they are being met or not. Additionally, one should keep in mind that interim audits are typically conducted at the conclusion of the fiscal year. Because of this, an impartial auditor also checks a company's financial records to confirm them (Biery 2013). This procedure's primary goal is to ensure that a corporation abides by the key rules that govern transactions and financial processes and are recognized in a nation. The necessity of this process is clear because it ensures that every business or organization is operating legally and clearly. Taxes receive a lot of attention as well, and they should be recorded in a company's financial records. Unfortunately, tax dodging is a common technique that unethical businesses utilize to get additional benefits. To make a business obey the law and pay taxes, an interim audit method should identify these attempts and impose certain fines. With this in mind, the relevance of the intermediate audit procedure can be emphasized strongly.

Final Audit

However, the final audit should come next, concluding the examination of a company's operations and determining whether or not it complies with the fundamental laws. With this in mind, it is possible to declare that an independent auditor examines a company's financial statements to determine whether or not they are set up in a way that is consistent with the company's primary objectives and financial policies.

Additionally, an auditor should draw a specific conclusion about how a company is operating at this point. In other words, it is feasible to say that all the data obtained throughout the process of examining financial reports and doing an analysis of some other crucial elements of a company's operation is compiled and summarised. At this point, an auditor should determine if a business operates in line with the primary laws and whether its financial records are transparent. This judgment affects how a business will operate in the future and determines whether or not sanctions should be imposed (Audit Finalization 2015).

Conclusion

With this in mind, it is possible to draw a certain conclusion after analyzing the key components of a subject, like an external audit. It should be noted that it comprises two parts, the interim audit, and the final audit, both of which are crucial for the process as a whole. In order to determine if a company's financial sector complies with the law, an auditor reviews the company's financial records and statements (Step 8: Final Audit Report Distribution n.d). As a result, it is reasonable to draw the conclusion that the external audit process is crucial since it helps shield the financial industry from fraud and speculative activity.

Reference List

Assessing the effectiveness of the external audit process 2013, Web.

Audit Finalization 2015, Web.

Biery, M 2013, The role of external auditors in detecting financial statement fraud,

Handling an external audit n.d., Web.

Meaning And Objectives Of Interim Audit n.d., Web.

Meaning And Objectives Of Periodical Audit Or Final Audit Or Complete Audit n.d., Web.

Millichamp, A & Taylor, J 2012, Auditing, Hampshire, Cengage Learning EMEA

Planning the external audit n.d., Web.

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