Controls2 - Auditing Auditing is a process to ensure that financial statements are free from material misstatement i.e they present a true and fair

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Auditing: Auditing is a process to ensure that financial statements are free from material misstatement i.e. they present a ‘true and fair’ view of the financial reports. There are two types of auditors; external and internal. The internal auditors are employed by the company. The external auditors are an independent third party, who give assurance to the users of the financial statements (shareholders, suppliers etc) that the financial statements, as presented by the entity they’re auditing, are as accurate as may be possible. This is in the form of their ‘audit opinion’, in which they also report on the ability of the entity to continue as a going concern (company will continue in operations in the near future) and the strength/implementation of the company’s internal controls (procedures set up by the entity to ensure that fraudulent activity does not take place). Auditors are concerned primarily with seven features of financial statements which they must be satisfied about. They are 1) Existence (only valid transactions are processed), 2) Occurrence (Transactions
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This note was uploaded on 11/04/2011 for the course ECON 112 taught by Professor Mike during the Spring '11 term at Université de Liège.

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