
The danger is that such statements, either deliberately or unintentionally, contain misleading or incorrect information
The audit gives CREDIBILITY to the financial statements
The auditor carries out an investigation into the contents of the financial statements and issues a report to shareholders
Who can act as an auditor?
•By members at the AGM by passing an ordinary resolution
•By directors to fill a casual vacancy OR to appoint the first auditor
•By the Secretary of State (if the company fails to appoint an auditor)
•INSPECTION: reviewing/examining records and/or tangible assets
•OBSERVATION: determining the manner of performance of an operation
•ENQUIRY: seeking relevant information from inside and outside of the organisation
•COMPUTATION: checking arithmetical accuracy
Key Elements:
•The terms of trade
•Approval of sales orders / credit limits
•Preparation of despatch notes / invoice
•Despatch of goods / proof of delivery
•Processing of sales invoices
•Credit note authorisation
•Handling & processing cash received
Key Elements
•Identify a need
•Find goods/services
•Raise requisition
•Approval
•Order
•Purchase received
•Matching GRN with PO
•Invoicing
•Matching GRN with PO and invoices
•Approval
•Payment
•Analysis
ISA700
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