Essay: Quality assurance of the audit engagements
Mr. Nolan further included in the article that there should be active steps in order to ensure quality assurance of the audit engagements. It was suggested that the quality assurance of the audit of listed entities should be conducted by a body governed by the state in order to ensure that the auditors are performing the engagements in the manner as it should be performed. Another issue that was raised was regarding the scope of audit. This is one of the inherent limitations of the audit. An auditor performs the audit on the basis of the audit evidence obtained which consists mainly of the underlying documents provided by the entity. If the entity conceals any records or limits the scope of the audit, the auditor will not be able to obtain extensive audit evidence thus the quality of the audit engagement will be impaired. Thus, it was suggested that the scope of an audit engagement should include explicit reporting by those charged with governance of the entity.
The article also raises the issue of the communication to relevant regulatory authorities in cases of audit of certain entities such as banks and insurance companies. In such cases, the auditors are required to meet the needs of the users of the financial statements and the regulatory authorities at the same time. The framework used for such communication is different for both the users. Thus, it was suggested that such framework should be used that is feasible for the regulatory authorities and the users of the financial statements at the same time. This would allow the auditors to allocate more time to the audit procedures. Thus the overall quality of the audit procedures would also increase.
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