Audit and assurance

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Types of audit

  1. Internal auditing 

    is an independent activity, established by management to examine and evaluate the organisation’s risk management processes and systems of control, and to make recommendations for the achievement of company objectives.

    Internal auditors have an unavoidable independence problem.  

    They are employed by the management of the company and yet are expected to give an objective opinion on matters for which management are responsible.

  2. External auditing 

    is the independent examination of the evidence from which the financial statements are derived, in order to give the reader of those statements confidence as to the truth and fairness of the state of affairs which they disclose.

    The fact that employees of the company know that their work may be inspected by external auditors may encourage them to document their work properly and dissuade them from fraud.

    External Auditors owe a duty of care to shareholders AS A WHOLE not individually

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