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    Compliance Audits Examine Whether The Company

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    Analyn Ceniza
    An accountant records, classifies, and summarizes financial information for a company, while an auditor validates the accountant's work and determines if the financial records accurately reflect economic events. An auditor must have expertise in collecting and evaluating audit evidence, determining appropriate audit procedures, and evaluating results. Financial statement audits examine if financial statements are accurate and comply with standards. Operational audits examine efficiency and effectiveness of operating policies. Compliance audits examine if a company follows contractual, regulatory, and management policies.

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    Compliance Audits Examine Whether The Company

    Uploaded by

    Analyn Ceniza
    86 views2 pages
    An accountant records, classifies, and summarizes financial information for a company, while an auditor validates the accountant's work and determines if the financial records accurately reflect economic events. An auditor must have expertise in collecting and evaluating audit evidence, determining appropriate audit procedures, and evaluating results. Financial statement audits examine if financial statements are accurate and comply with standards. Operational audits examine efficiency and effectiveness of operating policies. Compliance audits examine if a company follows contractual, regulatory, and management policies.

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    Operations management and TQM

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    MODULE-1

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    An accountant records, classifies, and summarizes financial information for a company, while an auditor validates the accountant's work and determines if the financial records accurately reflect economic events. An auditor must have expertise in collecting and evaluating audit evidence, determining appropriate audit procedures, and evaluating results. Financial statement audits examine if financial statements are accurate and comply with standards. Operational audits examine efficiency and effectiveness of operating policies. Compliance audits examine if a company follows contractual, regulatory, and management policies.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    86 views2 pages

    Compliance Audits Examine Whether The Company

    Uploaded by

    Analyn Ceniza
    An accountant records, classifies, and summarizes financial information for a company, while an auditor validates the accountant's work and determines if the financial records accurately reflect economic events. An auditor must have expertise in collecting and evaluating audit evidence, determining appropriate audit procedures, and evaluating results. Financial statement audits examine if financial statements are accurate and comply with standards. Operational audits examine efficiency and effectiveness of operating policies. Compliance audits examine if a company follows contractual, regulatory, and management policies.

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    ACTIVITY 1

    1. Discuss the differences and similarities between the roles of accountants


    and auditors. What additional expertise must an auditor possess beyond
    that of an accountant? (7 marks)
    Accounting and auditing are two professions that rely on the same pool of
    expertise and, for the most part, need similar knowledge and skill sets.
    Accountants and auditors deal with a company's financial statements to ensure
    that they are current, accurate, and compliant with various regulatory standards.
    However, subtle differences between the roles of these two exist. An accountant
    is a regular employee of the company and seeks after long-term employment. He
    has to keep his possess office within the building of the company who hired him.
    It is the accountant’s obligation to record, classify, and summarize economic
    events in a logical manner for the purpose of providing financial information for
    decision making. An accountant must have a strong and solid understanding of
    the concepts and procedures that serve as the foundation for creating accounting
    data in order to deliver pertinent information. Meanwhile, an auditor may have
    been employed on a short-term or project basis to validate or corroborate the
    accountant's work. He must ascertain whether the accountants' recorded data
    accurately reflects the economic events that transpired during the accounting
    period. Having mastery in the accumulation and evaluation of audit evidence,
    determining the proper audit procedures, deciding the number and types of items
    to test, and evaluating the results are the expertise sets that recognizes an
    auditor from an accountant.
    2. Discuss the similarities and differences between financial statement audits,
    operational audits and compliance audits. Give an example of each type. (8
    marks)
    Financial statement audits, operational audits, and compliance audits are
    similar in that they all include accumulating and evaluating evidence concerning
    data to determine and report on the degree of correspondence between the
    information and established criteria. Although all audits entail a review of
    supporting documentation, each type of audit serves a distinct purpose.
    Financial statement audits evaluate if a company's financial statements have
    been prepared and presented properly, fairly and in conformity with recognized
    financial accounting standards. For example, the annual audit of DOH, in which
    COA examined DOH’s financial statements to determine the truth and fairness of
    the department’s financial statements. Operational audits examine the
    efficiency and effectiveness of operating policies and procedures. For example,
    an internal auditor of a manufacturing company examines employee time records
    and personnel records to determine if sufficient information is available to maximize
    the effective use of personnel. Compliance audits examine whether the company
    has followed and complied with policies and regulations set forth by contractual
    agreements, regulatory bodies, company management, or other high-ranking
    officials.  For example, if a company is listed on a stock exchange outside the country
    in which it operates, they must ensure that the company conforms with the stock
    exchange's requirements and the compliance auditor should additionally assess
    these areas to see if the associated entity's present practices comply with the
    requirements.

    ACTIVITY 2
    1. One of the most talked issues recently is the denial of ABS-CBN Corp.
    franchise by the Congress. It is of public knowledge that SGV & Co. is the
    auditing firm who certified ABS-CBN’s financials. Can they be held
    accountable in terms of its failure to consider the going concern issue of
    the company when the circumstance of expiration of ABS-CBN’s franchise
    was expected to happen in May 2020 and there was a possibility of the risk
    of nonrenewal? What about the alleged creative accounting done by the
    management to further its interests? (500 words)

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