The Purposes Of Standard Audit Report Accounting Essay

An audit study is a study that reappraisal and evaluate by the hearer about a company to organize an sentiment whether the company used proper accounting entering method, the fiscal statement provide equal revelation ( John A. ) and demo true and just position, and conformity with the Law. The audit study can besides be known as a communicating channel between the hearer toward its stakeholder such as stockholders, public or investors, providers, bankers and more. There are a few type of audit study that will be prepare by the hearer which are standard audit study ( unqualified audit study ) , inauspicious or negative audit study, qualified audit study and more. The intents of hearer fixing these study are because of it is required by Law which is under Companies Act 1965 that require the external hearer to look into the fiscal statement of the company that appointed them to organize an sentiment on the company fiscal statement to obtain sensible confidence whether it is free from material misstatement and prepared conformity to the Act. The hearer will besides supply an sentiment that the history of the company show true and just position. If the company fiscal statements run into all demands above, so the hearer can supply a standard audit study for the company. These study will be utile for it stakeholder to cognize the public presentation, profitableness, liquidness and besides recognition worthiness of a company.

Main Body

The intents of standard audit study.

There are a few intents of standard audit study that I would wish to discourse approximately. The standard audit study is truly of import to the stakeholders and likely to impact their determination devising towards the company.

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Channel of communicating

The standard audit study is a channel of communicating between the hearers to the stakeholders. The information that provided by the hearers inside the audit study may impact the trust and determination of stakeholders towards the company. And because of the audit study, a company repute might be affected. An audit study is a must for the stakeholders or user of the fiscal statement because it is certified by an external hearer which is a non-related party to the organisation, group or company and it will be more trust-worthies instead than merely a fiscal statement that prepare by the company itself. So, what information inside the audit study that attract so much attending of the stakeholders?

The audit sentiment of the hearers that shown true and equity in the fiscal statements.

The accounting records is unbroken conformity to the Act

It is free from stuff misstatements

The fiscal statements is prepare harmonizing to the criterion approved by the IFRS.

With the audit sentiment above, the stakeholder may experience relieve and swear the financials statements that is prepare by the company. Standard or qualified audits study will assist a company to obtain loan from the Bankss, better the repute and besides aid in attracts the possible investors.

Required by the Company Act, 1965 Malaya

The 2nd intent of standard audit study that I am traveling to discourse approximately is the audit study is prepared under the demand of Company Act, 1965 Malaysia. An hearer is required to fix an audit study and supply ‘true and just position ‘ is required under s 169 Company Act. Under the Act, the hearer is besides required to organize an sentiment and supply independent confidence that the fiscal information from the company is dependable and province any failure or lack of the company fiscal statement. Furthermore, hearers is required by the act to describe whether the history have been decently drawn up.

Audit grounds

The other intent that I am traveling to discourse approximately is the audit process in obtaining audit grounds in the standard audit study. The standard audit study will demo that whether the hearer obtain adequate audit grounds in scrutinizing the company. Auditor need to roll up audit grounds to demo that the company fiscal statement did non hold any material misstatement that is due to fraud and mistake. A few process demand to be go through by the hearer in order to obtain the audit grounds. Risk appraisal is one of it. Under International Standard of Auditing 315, the hearer is required to execute hazard appraisal to understand the entity and its environment such as the internal control to measure the hazards of stuff misstatements. Test of control besides need to be perform to obtain audit grounds. The suitableness and effectivity of internal control will be tested in order to observe any fraud and mistake that will take to material misstatements. Other than that, substantial processs that are perform by proving the dealing or history balance will assist the hearer to turn up material misstatements that is cause by fraud and mistake. After hearer collected adequate audit grounds, so hearer will province inside the hearers ‘ duty of the standard audit study that they have get adequate audit grounds for their audit sentiment to province that the company fiscal statements show true and just position.

Provide information

Last, the major intent of standard audit study is to supply information about the company to the user. The company location, the concern run by the company will allow the user of the audit study to cognize more item about the company. The profitableness of the company that is present in the statement of comprehensive income will impact the determination of the user whether to put in the company or non. Furthermore, public presentation and wealth of the company will besides impact the determination of the user excessively. Investings of the company that shown in statement of fiscal place and farther account in note to the fiscal statements is besides the intent of the stakeholder expression into the standard audit study. The liquidness of the company that shows in the statements of hard currency flow of the standard audit study will besides impact the determination of the stakeholder. Besides, the user will besides likely to look into the audit sentiment of the hearer that province the status whether the company fiscal statement show true and just position. This information will take to alter of determination devising of the stakeholders.

The utility of standard audit study towards it stakeholders.

The standard audit study is utile to it stakeholders. Stakeholders need the information from the standard audit study to do determination on the company they are traveling to hold a concern trade with. There are assorted types of stakeholder that have involvement in utilizing the standard audit study such as stockholders, investors, bankers, providers, authorities, employees and more. Standard audit study has different utility for each and every different stakeholder. So now I am traveling to discourse about the utility of standard audit study based on the position of stakeholders.

Stockholders

First of all, allow ‘s speak about the stockholders. How is the standard audit study being utile to the stockholders? The standard audit study provides information and this information is of import for the stockholders in doing determination. For an illustration, the profitableness of the company is the most of import and important information that the stockholder want to cognize approximately. The net income that shown under the statement of comprehensive income will be analyzed by the stockholders and they are really interested in what make the different between this twelvemonth net income comparison to the last twelvemonth. Furthermore, the information that provided under statement of comprehensive income which is the dividend rate is besides really utile for the stockholders to cognize the dividend that they are traveling to acquire this twelvemonth. Next, the other utility of the standard audit study is that it can demo to the stockholders the public presentation or growing of the company. A good public presentation of the company will supply the stockholders confidence to the company that it will take to a bright hereafter. Other than that, stockholders will besides be interested in how is the capital of the company managed by the board of managers. Directors act as a steward of the company to safeguard and to the full use the assets of the company to maximise the net income. Stockholders can acquire to see in the standard audit study whether the assets is managed good or no.

Investors

The 2nd party that will happen that the standard audit study is utile is the investors. Investors will probably to cognize about more inside informations about the company and the standard audit study will demo the basic information of the company like who is the manager, the company location, which sectors the company into and more. Second, the investors are besides really interested in the company public presentation and profitableness. If a company is executing good and hold a good net income, so the investor will be more likely to put in the company because they would wish to acquire a good return in signifier of dividend or capital earning. Is a company is executing harmonizing to the Act and did the fiscal statements contain any stuffs misstatements due to fraud and mistake is besides what the investor want to cognize approximately. All the information inside the standard audit study that is reference above whether it is good or bad, the investor will happen it utile in doing determination whether to put in the company or non.

Creditors

There are two creditors that I would probably to discourse about which are the bankers and providers. These two parties will happen that the information in the standard audit study is really utile to them. Let ‘s get down with the bankers. Bankers will wish to cognize about the recognition worthiness of the company before they are traveling to allow the company loan. The bankers will looking into the past or current loan record of the company to see whether the company is paying back the loan in a good mode. Bankers will besides necessitate to cognize about the information such as the net income, hard currency flow, assets and liability before grating a loan to the company. Those points I mention supra will impact the determination devising of a banker if the company did non demo good figures that meet the bankers ‘ outlook. Following, I am traveling to discourse about the providers. Suppliers who would wish to supply service to the company will looks into the standard audit study foremost before doing any judgement. The information in the standard audit study which is the liquidness that shows under the statements of hard currency flow will impact the providers ‘ determination. Other than that, the profitableness, trade payables, good will and other information will besides be go through by the providers before doing determination.

Other stakeholder and position

The information provided inside the standard audit study is besides really utile to the authorities because the authorities want to supervise the company the activities whether it is staying the Law or non. Second, authorities or the revenue enhancement governments will wish to look through the profitableness because they need to guarantee that the company is paying right sum of revenue enhancement and in conformity to the Tax Law and ordinances. ( Inland Revenue Board )

Finally, I am traveling to discourse about the trust or confidence. This is the most of import factor that made the standard audit study utile to every stakeholder. This is because the fiscal statements are prepared by the managers and the stakeholder could non merely believe in the fiscal statements. The standard audit study that is produce by the independent hearer which is the 3rd party that has no relation to the company will supply sentiment on the company fiscal statements and will give confidence to the stakeholders that the company fiscal statements are trustable. And this is the portion that makes the standard audit study utile.

Decision

As a decision, we can see that the information is really of import to the stakeholder for the intent of determination devising. The information from the standard audit study is besides a really utile tool for the stakeholders excessively.

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