Audit and Assurance Essentials

Question: Discuss about the Audit and Assurance Essentials. Answer: Introduction: Auditing is part of the managing an organization, it is describe as the official examination and verification of the financial records of an organization, this examination is to ensure that the financial statement presented shows true and fair view of the company performance. Auditing is conducted in order to detect errors and frauds which might limit the performance of the organization as well as to avoid factors which might hinder audit process. According to Thomas Browne, auditing is dynamic in nature errors according to him kept on changing, this was supported by E.S. Merton who once summarized the science view of E.S. Merton. The main purpose of auditing is to obtain the truth about a particular subject, Thomas Browne uses three determinant to obtain the truth. Authority from the past authors represents previous independent auditors who performed audit procedures in a firm. The acts of reasoning, as well as empirical experience, form his part while relating his experience with auditing(Elder, Beasley, Arens, 2011). Accounting, on the other hand, is defined to be the systemic process of identifying, recording, measuring, classifying, interpreting and communicating the financial information in a firm. Thomas Browne science indicated a procedural process of accounting(Waldron M. , 2016). The mistake which was detected during his age believed to be procedural and that they originated from the mistake done by the previous accountants. Authority would be embrace to be an essential element of errors and other mistakes performed during accounting process. E.S. Merton summarized the research conducted by Thomas Browne in relation to accounting. The accounting information may be manipulated or otherwise may not be well represented because of lack of competency, during their age accounting process were conducted manually and this could be born from many factors which includes lack of competency with the accounting filed(Porter, Simon, Hatherly, 2014). Accounting and auditing are the related strategic management approached which are reflected to be essential to any departments and organization. They act as the pillars of determining the success of the organization(Simnett, Zhou, Hoang, 2016). Trust and Auditing Trust takes years to build, seconds to break, and forever to fix, this statement reflects how the organization management, suppliers, customers and subordinates interacts in a business organization. Auditing is defined to be the independent examination of business financial records, this independent examination is to evaluate whether the financial statements of the business enterprise show a true and fair view of the firm performance. Auditing is an essential factor which defined how individuals interact in an organization(BAYSHAW, 2012). Trust between the business stakeholders in an organization takes a longer time to be built. Auditing process requires the management to implement on an essential measure which defined how people interact in an organization. Good and noble interaction between subordinates from a different department in an organization strives towards establishing a strong trust between themselves(Boynton Johnson , 2006). Apparently, a trust could be altered by shareholders as well as other stakeholders in an organization. When an adversity of trust is detected by the management, stakeholders or any stakeholder fixing will be forever, this implies that when trust is built and broken it will last for a longer time. Internal control system are considered to be the appropriate measure which should be well used when developing a coherent trust between the auditors, management and other stakeholders(Elbardan, 2016). The internal control system should be well embraced by the auditors in order to settle the deviations which are experience in the company as a result of lack of trust between the stakeholders and the management. During the process of developing trust, the auditors and the management should take into consideration the moral principles and guidelines which govern the operations of the company. Reliability Reliability is one of the factors which should be used by the management and auditors to build broken trust and fix it adversities, it implies the provision of reliable information which will be used while making an opinion which will be used during the audit report. Trust between the organization and shareholders is created managers provide the reliable information which is professionally presented in order to make the conclusive decision which will determine the operation of the company(Hayes, Wallage, Gortemaker, 2014). Credibility Credibility is a fundamental factor which determines the affiliation between external, auditors and management in a business enterprise. Credibility is an important factor that is focusing towards addressing the emotional effects which might arise between the shareholders and the management, the professionalism knowledge and experience between management and auditors act as the pillars of credibility between managers and auditors in an enterprise(Kend, Houghton, Jubb, 2014). Martin Shkreli Martin Shkreli is an America entrepreneur and pharmaceutical executive, he is one of the pioneers of hedge founder of MSMB Capital Management, and he is also the former chief executive officer of biotechnology firm call the Retrophin. Martin Shreli is known for his determination as an entrepreneur. His courage has led to his success in the business world. Martin Shkreli is also the founder and former CEO of Turing Pharmaceuticals. His leadership in business organization has been observed to be the exceptional and substantial it embraces the achievement of the strategic goals and objectives. Martin Shkreli has exceptional leadership skill which has been his pillar of becoming one of the world billionaires. He was arrested by the American FBI for after being indicated to be part of the federal charges of security frauds in America. According to the investigation done FBI, Martin and his corporation have manipulated and hinder with their financial performance, this was to allow him to increase the companies earning(Kend, Houghton, Jubb, 2014). Martin Shkreli has focused in embracing shareholders concern by producing quality products. According to his report on the pharmaceutical corporation, his deliberation is to do the correct and right thing to the stakeholders of the company. Abraham Lincoln Abraham Lincoln use is well known for motivational quotes which are used to inspire people lives. Abraham Lincoln speaks about 10 hours of sharpening the axe and 8 hours of chopping down a tree. 10 hours of sharpening represent the longer time of preparation of auditing while 8 hours presents the shortest time that could be taken to complete audit tasks. However, his quote represents the importance of planning and understanding the level of the task that is going to be undertaken. The process of sharpening the axe replicates the essential procedures which are installed by both the management and auditors in order to complete the audit process(Lincoln, 2007). Managers and auditors have to take their time to restructure approaches which should be used while conducting audit process in an organization. Managers have to consistently play their role by ensuring that they prepare their financial records in accordance with the acceptable guidelines with the purpose of creating smooth time during the audit process. The company department should be well informed about the audit process as well as the exact time in order to prepare well for the auditing. It is the role of the management to early communicate about the auditing dates ad time, this will allow the entire organization to prepare for the auditing which will be conducted by the auditors(Leung, Coram, Cooper, 2007). Auditors and managers are the key stakeholders who plays a crucial role to determine how fast they can complete the audit tasks, their mandate is to implement on the substantial audit procedures which will be used during auditing. The internal control systems to be sued by the auditor should be well explained to the company management as well as to the general staff, this will allow the auditors to use less time while performing the audit process. The measure should embrace by the auditor to the management in order to allow them to educate their staff about auditing as well as its importance to the company operations(Lincoln, 2007). Generally, Abraham Lincoln has used his quote to embrace the essence of auditing as well as its related aspects. His quote is used to embrace the importance of early preparation as well as understanding substantial audit procedure which is relevant to the organization. He has explained the mandate of management and auditors during the auditing process. The obligation of the management to ensure that they have prepared their financial records in accordance with the acceptable principles, this will give the auditors less time while examining and evaluating the financial record(Messier, 2016). On the other hand, auditors have to explain the audit procedures and their importance to the management, this will allow the management to be familiar with the audit process, and thus allow the auditors to spend less time during the auditing. References BAYSHAW, K. (2012). Audit and assurance essentials. Boynton, W. C., Johnson , R. N. (2006). Modern auditing: Assurance services and the integrity of financial reporting. Wiley. Elbardan, H. (2016). ERP systems introduction and internal auditing legitimacy: An institutional analysis. Information Systems Management. Elder, R. J., Beasley, M. S., Arens, A. A. (2011). Auditing and Assurance services. Pearson Higher Ed. Hayes, R., Wallage, P., Gortemaker, H. (2014). Principles of auditing: an introduction to international standards on auditing. Pearson Higher Ed. Kend, M., Houghton, K., Jubb, C. (2014). Competition issues in the market for audit and assurance services: are the concerns justified?. Australian Accounting Review. Leung, P., Coram, P., Cooper, B. (2007). Modern auditing assurance services. John Wiley Sons Australia. Lincoln, A. (2007). Abraham Lincoln Quotes .ThinkExist. Available from https://thinkexist. com/quotes/abraham_lincoln/. Internet. Retrieved from https://thinkexist. com/quotes/abraham_lincoln/. Internet Messier, W. J. (2016). Auditing assurance services: A systematic approach. McGraw-Hill Higher Education. Porter, B., Simon, J., Hatherly, D. (2014). Principles of external auditing. John Wiley Sons. Simnett, R., Zhou, S., Hoang, H. (2016). Assurance and Other Credibility Enhancing Mechanisms for Integrated Reporting. In Integrated Reporting. Palgrave Macmillan UK. Waldron, M. (2016). The Future of Audit. CFA Institute Magazine (Vol. 3).