What Is the Need for an External Audit - 1629 Words

The need for an external audit in the case of companies arises primarily from the existence of split-up of ownership from control. When control is shared an audit report will be needed in order to ensure that all the partners or be it shareholders are on the same page as the managers (the ones who will be controlling the company) and know what has been happening in the company, what is happening at present and what can be expected to happen in the future in order to increase returns in the company. The case of an owner controlled company is different as usually the manager will be working in the company and will be aware of everything that will be taking place and will not need an audit report to find out what is going on. Since the†¦show more content†¦Where the financial year started after April 2008 the parameters increased to, annual turnover less than 6.5 million pounds, balance sheet total less than 3.26 million pounds and average number of employees less than 50.When an owner controlled company satisfies the audit exemption parameters it can maintain that audit exemption for a full financial year afterwards even if the parameters were exceed in that following financial year. There are benefits in submitting abbreviated accounts as simpler and easier accounting records can be maintained reducing time spent on accountancy work. In addition although potential suppliers and financial institutions may require details of the year end financial accounts it is acceptable not to publish full details. In China, Owner controlled companies have an exemption from the audit and this gives management for smaller companies some newfound flexibility, Alyssa Martin says. Companies may not have to produce as much documentation or perform as much testing to produce management’s assertion as they might have had to produce for the sake of the audit, she says.â€Å"They can use other measures, like ongoing monitors or their own personal experience, to assess i nternal controls when they don’t have to have the external auditor auditing their process or leveraging their process in performing the audit of internal control,† notes Weaver’s Martin. Yong Xu, CFO for Jingwei International,Show MoreRelatedIndependence of External Auditor1203 Words   |  5 PagesIndependence of external auditor By:- shubham kanchhal Auditor independence  refers to the independence  of the auditor  from parties that may have a financial interest in business being audited. Independence requires integrity  and an objective approach  for the audit process. This concept requires the auditor  to carry his work freely and in an objective manner. 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Capriotti – Source 1 Summary: This article is generally about how data analytics and the increasing amount of data that is starting to be compiled in the business world will shape how internal and external audits will be completed and evaluated. Essentially, the article starts talking about how there is so much data in the world and that it comes from many different sources including the web, books, or other reference materials. The article also mentionsRead MoreAudit Committees Post Sarbanes - Oxley 1692 Words   |  7 PagesAudit Committees Post Sarbanes - Oxley The importance of audit committees increased through the years and especially from pre-Sarbanes – Oxley to post-Sarbanes – Oxley. Although, what are the responsibilities of the audit committee members? How does a Chief Audit Executive (CAE) more effectively serve their audit committee members? How do auditors communicate with audit committees? What are the requirements for audit committees? Most of these questions are inherited from what the auditRead MoreWhy Is It Important for External Auditors to Be Independent? Relate Your Answer to the Primary Role of External Auditors. Give Examples of Specific Ways the Lack of Auditor Independence May Impact Adversely on an Audit.1648 Words   |  7 Pages33237972 Word count: 1304 words AcF 100 Introduction to Accounting and Finance Lent Term: Individual Coursework Essay Topic: Why is it important for external auditors to be independent? Relate your answer to the primary role of external auditors. Give examples of specific ways the lack of auditor independence may impact adversely on an audit. In 2001, there was an event that had shaken the whole business world. 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