Name: Teslimat.O. Momoh
ID:20220501
Department: Accounting
Level :200 Level
1. List and explain 10 types of audits
A. Government Audit: Government Audits are those who
audit the financial position of Government agencies and
private businesses involved in activities pertaining to
government regulations, taxation, foreign exchange,
etc. Most of the Government Audits are associated with audit
firms which cater only to the public sector. The main role of
the Government Audits is to ensure that the finances are
spent and earned according to the stipulated laws and rules.
They conduct a high-quality audit that holds their clients
accountable for the use of public resources in compliance with
laws and regulations. Some of the functions performed by the
Government Audits are:
o Readiness for Audit Examination of the report
o Financial statement audits
o Compliance audits
o Performance audits
o Internal control testing
o Information system control audits
B. Forensic Audit:
They are one of the most specialized kinds of audits. Forensic Audits are
akin to external audits in their functions but the purpose of their audit is
very specific. This audit is performed as a part of certain legal
proceedings. The audit report is a part of the report that needs to be
submitted as evidence. The Forensic auditor may conduct the audit to
impeach a party against crimes such as embezzlement, fraud or any
other criminal activity. The key objectives for a Forensic Audits are:
 Identifying
if any fraud is being carried out
 Determining the period of fraud
 Investigating how the fraud was conducted in secrecy.
 Estimating the amount of loss that may have occurred.
 Gathering accurate evidence to be produced in court
 Recommending measures to prevent these frauds
Being a specialized field of audit, Forensic auditors must possess expert
knowledge in multiple areas which include:
o Accounting
o Criminology
o Law
o Investigative Auditing
C. Financial Audits:
Financial Audits is essential for the organization as the shareholder
invests money in the business and needs to know if their money is being
properly used. A financial audit is normally performed by an external
audit firm that holds a CPA and is normally performed annually and at
the end of the accounting period. This type of audit is also known as
financial statements auditing. But, sometimes, as required by
management, bank, security exchange, regulation, or else, the financial
audit is also performed quarterly. Most entities prepare their financial
statements based on IFRS, and some financial statements are prepared
based on local GAAP.Financial Audit is an audit of the books of
accounts to know if the organization is expressing the actual books or
hiding some facts from their investors.
D. Tax Audit:
A tax audit is a type of audit that performing by the government’s tax
department or tax authority.
A tax audit could be performed as the result of in-compliant found by a
government agency or the schedule set by the government tax
department.
An entity needs not to invite or engage with the tax authority to come
to perform a tax audit. They will come by themselves. An entity just
needs to file its tax obligation properly and timely based on the
country’s tax law. To minimize the penalty as the result of the tax audit,
the entity is recommended to follow all the requirements set by tax law
and for those areas that they are not sure about, the entity should
engage with a tax consulting firm for advice.
E. Performance Audit:
Performance audits cover a variety of assessments. A firm may request a
performance auditor to evaluate any of the following objectives:
 Program
effectiveness and results
 Internal controls
 Compliance with certain requirements
 Prospective analysis
 Operational Audits
Operational auditors review an organization’s activities with specific
aims. An auditor will analyze the process, procedure, and system; and
evaluate operational effectiveness, efficiency, and productivity.
F. Employee Benefit Plan Audit:
An employee benefit plan audit analyzes and evaluates an employee
benefit plan’s financial statements. During the audit your engaged audit
firm examines whether the financial statements contain any material
misstatements that may result from fraudulent reporting or
unintentional errors. The findings from the audit provides the basis on
which the auditor reports on the financial statement containing the EBP
(employee benefit plan)
G. Compliance Audit:
A compliance audit is a type of audit that checks against the internal
policies and procedures of the entity as well as the laws and regulations
where the entity operates. Law and regulation here refer to the
government’s law where the business is operating.
For example, in the banking sector, there are many regulations required
for bankers to follow and comply with.
Most of the central banks require commercial banks to set up a
complaint review (assessment) or compliance audit to ensure that they
comply with those laws and regulations.
The entity may also assign its internal audit function to review whether
the entity’s internal policies and procedures are complying and
effectively followed.
A compliance audit is part of the system used by the entity’s
management to enforce the effectiveness of the implementation of the
government’s laws and regulations, and the entity’s internal policies and
procedures.
H. Information Technology Audit:
An information system audit is sometimes called an IT audit. This type
of audit assesses and checks the reliability of the security system,
information security structure, and integrity of the system so that the
system’s output is reliable.
Sometimes, financial auditing also requires IT auditing as now
technology is increasing and most of the client’s financial reports are
recorded by complex accounting software.
The audit approach also changed due to the changing of management’s
approach in recording and reporting their entity’s financial information.
Normally, before relying on information systems (software) that are
used for producing financial statements, auditors must have IT and audit
teams test and review that information system first.
Especially, when an entity uses an ERP system where the operational
reporting’s are also integrated with the accounting system. For example,
a banking system normally links operational reporting with the
accounting system.
IT audit is also offered and requested separately from the financial audit.
As you know, most big firms have this kind of service. They do not only
provide IT audits but also offer consultants in the information system
areas.
I.
Statutory Audit:
This is an audit of financial statement for the specific type of
entities required by law or local authority. For example, all
banking sectors require their financial statements to be audited
by qualified audit firms authorized by their central bank.
Statutory audits are a legally required review of the accuracy of
a company’s financial statements, books and records. The
purpose of a statutory compliance audit is to determine whether
an organization is providing accurate representation of its
financial position. It also demonstrates some of the financial
reports, which include the following:
 Statements
of bank
 Number of clients
 Earning on investment
 The Audit improves the transparency and trust among all the
public and stakeholders of the organization.
J. Internal Audit:
As the name suggests, it is an audit of internal affairs; the Audit is
carried out to decide if the internal part of the organization as per the
rules and regulations. Internal auditing can be done by anyone, even by
the organization’s employees. In this type of Audit, the audits check if
the organization follows proper norms and rules and whether it
complies with all the internal regulatory standards.
ASSIGNMENT 2
1.The directors hire and fire the auditors as a result they cannot give
a true report on the financial statement explain.
The shareholders fire and hire the external auditors, but the internal
auditors are hired and fired by the directors. Because the directors are
responsible for hiring and firing them they can make their working
experience a sour one like giving them unfair query, increasing their
workload or even giving them indiscriminate suspension or trying other
things just to control them and instill fear. As an employee you’re
answerable to your employer. So whatever the director tells the auditor to
do, he/she will do even if its unethical, thus affecting the independence
of the financial statement.
2.Dicuss the qualification of auditors with reference to the provision
of the company and alliance matters act of 2020 at the case of
internal auditors.
The “CAMA 2020” i.e. the company alliance matters 2020 which
was previously known as the “CAMA 1990” was amended by his
former Excellency Muhammadu Buhari and below are the
qualifications of an internal auditor:
NOTE: These qualifications points to auditors that are
outsourced or auditors that are about to be employed not
auditors that have been working in the company.
A person shall also not qualify for appointment as an audit of a
company if he is
under, disqualified for appointment as anauditor of any other b
ody corporate which is that company's subsidiary orholding co
mpany or a subsidiary of that company's holding company
A firm is qualified for appointment as auditor of a company all
the partners are qualified for appointment as auditors of the
company
No person shall act as auditor of a company at a time when he
knows that he is disqualified for appointment to that office and i
f an auditor of a company to his knowledge becomes so disqual
ified during his term of office, he shall thereupon vacate his offi
ce and give notice in writing to the company that he has vacate
d
3.Explain why you think external auditors are required to report to
members of company
The members of the company who are the owners of the business also
known as the shareholders are the people but aren’t the people working
there so they will have to see the financial statement to knowhow their
business is fairing. But the financial statement produced by the internal
auditor cannot be trusted, hence external auditors are hired and these
external auditors don’t give their reports to the board of directors instead
it’s given to the people who hired them i.e. the members’ of the company.
The external auditor reports to them because they are the hirers and
because they want to give an independent report at the end of the
auditing process to give a fair statement. Because if the external auditor
decides to give the board first or give the board to pass to the shareholders
the end result can be compromised.
4.Without much right to information and explanation, the work of
internal auditors is likely to be jeopardized explain
This is like giving a farmer detergent to go to the farm and expecting him
to come back with yam. When access to the right information is restricted
one cannot get the right end result the same goes for auditing when the
directors don’t give the right information to the internal auditors the
cannot produce a true fair and independent statement because auditing
isn’t about speculations it’s about facts.
ASSIGNMENT 3
Auditing origin can be traced back to the 18th century, when the practice
of the industrial revolution. Lawyer Sawyer (1911-2022) conceived the
theory of internal auditing and he’s often referred to as the ‘’father of
modern internal auditing’’.
Audit is derived from the Latin word ‘Audire’ which means to hear.
Thus the auditor became a hearer or listener. Auditing was done orally in
clock ages. Auditing was found in the present at ancient CHINA, EGYPT
and in GREECE as a way of checking accounting information. The
information recorded auditors were spies of king DARIUS of ancient
Persia from 522 to 486 BC that is 1840-1920.The government accounting
system in china included a broad budgetary process of all accounting
departments. In 1494 Luca Pacioli in his book “Summa de arithmetica
geometria proportioni et propotionalita”.
Modern auditing began in 1844 when the British parliament
passed the joint stock companies act. In the present time, for the first time
the act required a director’s report to the shareholder through the
statement of financial position. Up until the 1990 a new company was
passed to ensure all auditors are accountants. The American association
of public accountants was formed in 1887, which later became American
Institute of Certified Public Accounts (AICPA). Auditing was transaction
oriented which means it follows a procedure that relied largely on internal
evidence (1920-1960) the U.S practice evolved since the late 19th century
towards a process of collecting its assets as a balance sheet audit. As a
result of extensive misleading financial reporting which contributed to
the stock market crash of 1929. In the early 1980 there was a
readjustment in auditing which approaches the assessment of internal
control system which was found to be an expensive process, so the
auditors began to cut back on their system work and make greater use of
analytical procedures.
In 1980, risk based auditing was developed. Risk based auditing is an
audit approach whereby an auditor will focus on those areas which are
more likely to contain errors. In the present time which is 1990 till date,
all over the world audit objectives in the present period remains the same
which is the lending credibility to the financial statement. Control
changes have been made to the audit practice as a result of the extensive
reform in various countries.
Assignment 4
1. Differentiate between a financial statement and audited
financial statement?
A financial statement is a list of documents that shows a
company’s financial status at a particular time while an audited
financial statement are financial statements that are reviewed by an
independent auditor for accuracy and compliance.
2. Define positive and normative theory with its benefits and
criticism
Positive theory in refers to a theoretical framework that seeks to
explain and predict the actual behavior of auditors and other
stakeholders in the auditing process. It focuses on understanding
how auditors make decisions and how their behavior is influenced
by various factors such as incentives, regulations and professional
standards. Positive theory in auditing aims to provide insights into
the real-world practices of auditors and how they interact with the
auditing environment. It's a valuable tool for researchers and
practitioners in the field of auditing.
Benefits
1. Descriptive insights: Positive theory helps us understand how
auditors actually behave in practice, providing descriptive insights into
their decision-making processes.
2. Realistic expectations: By studying actual auditor behavior, positive
theory helps set realistic expectations about what auditors can and
cannot achieve in practice.
3. Improved audit quality: Understanding the factors that influence
auditor behavior through positive theory can lead to improvements
in audit quality and effectiveness.
4. Enhanced regulatory policies: Positive theory can inform the
development of regulatory policies that are grounded in the reality
of auditor behavior, making them more effective and practical.
5. Continuous improvement: By studying how auditors respond to
changes in the business environment, positive theory supports
ongoing learning and continuous improvement in auditing
practices.
Criticism
1. Lack of normative guidance: Positive theory focuses on
describing and explaining behaviors as they are, without providing
clear guidance on how things should be. This can limit its usefulness
in prescribing ideal or ethical behaviors.
2. Limited predictive power: While positive theory aims to
predict behaviors based on empirical evidence, it may not always
accurately predict future actions or outcomes. Human behavior
can be complex and influenced by various factors, making it
challenging to make precise predictions.
3. Overemphasis on descriptive analysis: Positive theory often
prioritizes describing and analyzing existing behaviors,
sometimes at the expense of understanding the underlying
reasons or motivations behind those behaviors. This can limit the
depth of understanding and hinder the development of
comprehensive solutions.
4. Potential for bias: Positive theory can be susceptible to bias, as
researchers may interpret and analyze data based on their own
preconceived notions or beliefs. This can introduce subjectivity
and affect the objectivity of the theory's findings.
5. Lack of prescriptive solutions: Positive theory may fall short
in providing practical solutions or recommendations for
improving behaviors or outcomes. It focuses more on observation
and explanation rather than offering clear guidance for
addressing identified issues.
Normative theory refers to theories that focus on how things
should be or how they ought to be. It involves prescribing ideal
standards and guidelines for auditing practices. Normative
theories in auditing often provide recommendations for ethical
behavior, professional standards, and best practices. They serve
as a guide for auditors to follow in order to achieve desired
outcomes and maintain the integrity of the auditing process.
Benefits
1. Ethical guidance: Normative theory provides a framework for
auditors to follow ethical principles and professional standards,
ensuring integrity and accountability in their work.
2. Consistency and comparability: By prescribing specific
behaviors and practices, normative theory promotes consistency
and comparability across different audits, enhancing the
reliability and usefulness of audit reports.
3. Investor confidence: Normative theory helps build investor
confidence by setting clear expectations for auditors'
responsibilities and actions, ultimately contributing to the
stability and trustworthiness of financial markets.
4. Regulatory compliance: Normative theory aligns auditors'
behavior with regulatory requirements, ensuring compliance
with laws and regulations governing the auditing profession.
5. Professional development: Normative theory encourages
auditors to continuously develop their skills and knowledge,
promoting a culture of lifelong learning and improvement
within the auditing profession.
Criticism
1. Subjectivity: Normative theory is based on subjective judgments and
opinions, which can vary among different individuals or groups. This
subjectivity can lead to disagreements and a lack of consensus on what
is considered "normative."
2. Lack of empirical evidence: Normative theory often lacks
empirical evidence to support its claims and recommendations. It
relies more on theoretical frameworks and assumptions rather than
real-world data and observations.
3. Unrealistic assumptions: Normative theory may make
assumptions that are not realistic or practical in the real world. These
assumptions can limit the applicability and effectiveness of the theory
in guiding decision-making and behavior.
4. Ethical bias: Normative theory is often influenced by ethical
perspectives, which can introduce bias and limit its objectivity.
Different ethical frameworks can lead to conflicting normative
recommendations.
5. Limited practicality: Normative theory may provide idealistic or
abstract recommendations that are difficult to implement in
practice. It may not consider the complexities and constraints of
real-world situations, making it less practical for decision-making.
3.Discuss the appointment, remuneration and removal of and
external auditors.
Auditors are appointed during the annual general meeting and their
appointment must be approved by shareholders. The act also specifies the
procedures of notifying the auditors of their appointment and duration
The act further says their remuneration should be determined by the
shareholders during the annual general meeting, it emphasizes the
importance of a fair remuneration The remuneration of auditors is
typically determined through agreements between the auditors and the
companies they serve. The fees for auditing services are usually
negotiated based on factors such as the complexity of the audit, the size
of the company, and the scope of work involved.
It's worth noting that the remuneration of auditors should be fair and
reasonable, taking into account the value of the services provided and the
expertise required. This helps ensure the independence and objectivity of
auditors in carrying out their responsibilities.
The removal of auditors according to section 632 of Companies and
alliance matters act 2020, the removal of auditors can be affected in the
following ways;
a. A company by an ordinary resolution may remove an auditor before
the expiration of his term in office not withstanding any agreement
before it and him.
b. When a resolution removing an auditor is passed at the annual
general meeting, the company shall within 14 days, give notice of
the fact in its prescribed form to the corporate affairs commission.
c. The removal provision shall not deprive the auditor of
compensation or damages payable to him.
ASSIGNMENT 5
 Summarize ISA 320
ISA 320, or International Standard on Auditing 320, is a standard
issued by the International Auditing and Assurance Standards
Board (IAASB). It provides guidance to auditors on materiality in
planning and performing an audit.
The main objective of ISA 320 is to help auditors determine the
appropriate materiality levels for the financial statements as a whole
and for specific classes of transactions, account balances, or
disclosures. Materiality refers to the significance of an item or
information in influencing the decisions of users of the financial
statements.
The standard emphasizes the importance of professional judgment
in assessing materiality, considering both quantitative and
qualitative factors. It also provides guidance on evaluating
misstatements, including those that are individually immaterial but
may be material when aggregated.
Overall, ISA 320 assists auditors in planning and conducting audits
effectively by considering materiality as a key factor in their work.
 List three auditing misconceptions
a. People think that auditors are responsible for the financial health
of the company they audit.
b. Some people think that auditors are only concerned with
numbers and financial data.
c. Some people think that all auditors follow the same
methodology
 Draw the organization chart of an auditing firm and show the
chain of command
ASSIGNMENT 6
1. Roles and functions of the CAC
o Registration of Companies
o Regulation and Supervision
o Business Name Registration
o Intellectual Property Registration
o Company Search and Information Services
A. Differentiate between ordinary shareholders, preference
shareholders and debenture holders
1. Ordinary Shareholders: These are the owners of a company
who hold ordinary shares or common stock. They have
voting rights and are entitled to a share of the company's
profits in the form of dividends. However, their dividend
payments are not fixed and can vary based on the company's
performance. In the event of liquidation, ordinary
shareholders have the lowest priority in terms of repayment.
2. Preference Shareholders: Preference shareholders also own a
portion of the company, but they have certain preferences or
advantages over ordinary shareholders. They receive fixed
dividends, which are paid out before any dividends are
distributed to ordinary shareholders. Preference shareholders
do not usually have voting rights, but they have a higher claim
on the company's assets in the event of liquidation compared to
ordinary shareholders.
3. Debenture Holders: Debenture holders are creditors of the
company. They lend money to the company by purchasing
debentures, which are essentially a type of loan agreement.
Debenture holders receive fixed interest payments at regular
intervals, similar to bondholders. In the event of liquidation,
debenture holders have a higher priority in terms of repayment
compared to both ordinary and preference shareholders.
In summary, ordinary shareholders have voting rights and variable
dividends, preference shareholders have fixed dividends and limited
voting rights, while debenture holders are creditors who receive
fixed interest payments.
B. Discuss the principles of confidentiality in relation to a
limited liability company and state the circumstance and
auditor may have to disclose the information
Confidentiality is a fundamental principle in auditing that
requires auditors to keep information obtained during the
audit process confidential. As auditors, they have a duty to
respect the privacy and confidentiality of the company's
financial and non-financial information.
However, there are certain circumstances where an auditor
may have to disclose information. Here are a few examples:
1. Legal Requirements: If there is a legal obligation or
requirement to disclose information, such as a court order
or a request from a regulatory authority, the auditor may
be required to disclose certain information.
2. Fraud or Illegal Activities: If the auditor discovers evidence
of fraud, illegal activities, or material misstatements that could
have a significant impact on the financial statements, they may
be obligated to report this to the appropriate authorities or
management.
3. Consent from the Company: In some cases, the company
may provide consent to the auditor to disclose certain
information to specific parties, such as potential investors or
lenders.
It's important to note that auditors must exercise professional
judgment and adhere to ethical guidelines when considering
the disclosure of information. They should always prioritize
the confidentiality of the company's information unless there
are compelling reasons to disclose it.
C. What is professional ethics and discuss four ethics applicable
to an accountant
Professional ethics refers to the principles and standards that
guide the behavior and conduct of professionals in their
respective fields. It encompasses the moral and ethical
obligations that professionals have towards their clients,
colleagues, and the public. In the context of auditing,
professional ethics plays a crucial role in maintaining the
integrity and objectivity of auditors.
1. Independence: This is a fundamental principle of auditing ethics. It
refers to the auditor's ability to perform their duties in an unbiased
and objective manner, free from any conflicts of interest or undue
influence. Independence is essential to ensure that auditors can
provide an impartial assessment of the financial statements and
report their findings accurately.
2. Objectivity: When it comes to auditing, objectivity is a crucial
principle that auditors must adhere to. Objectivity means that
auditors must approach their work with impartiality, free from any
personal or financial biases. They should base their judgments and
conclusions solely on the evidence and facts they gather during the
audit process. Maintaining objectivity ensures that auditors can
provide an unbiased and independent assessment of the financial
statements and internal controls of an organization. It helps to instill
confidence in the reliability and credibility of the audit report
3. Confidentiality: Confidentiality is an important professional ethic that
auditors must uphold. It means keeping client information and audit
findings confidential, unless there are specific circumstances that
require disclosure. Auditors have a duty to respect the privacy and
confidentiality of the information they come across during the audit
process. This helps build trust between auditors and their clients, as
well as maintain the integrity of the audit.
4. Integrity: Integrity is a crucial professional ethic that auditors must
embody. It means being honest, ethical, and maintaining a strong
moral character in all professional dealings. Auditors with integrity
adhere to the highest standards of conduct, ensuring that their
actions are guided by honesty, fairness, and transparency. By
upholding integrity, auditors demonstrate their commitment to
delivering accurate and reliable audit opinions, which helps maintain
the trust and confidence of stakeholders. It's an essential quality for
auditors to possess, as it ensures the credibility and reputation of the
audit profession.
.
D. Discuss the significance of independence to the work of
auditors and enumerate four measures one can take to enhance
his independence.
Independence is a fundamental principle of auditing ethics. It
refers to the auditor's ability to perform their duties in an
unbiased and objective manner, free from any conflicts of
interest or undue influence. Independence is essential to ensure
that auditors can provide an impartial assessment of the
financial statements and report their findings accurately.
Auditor independence is significant for several reasons:
1. Objectivity: Independence helps auditors maintain an
unbiased perspective when evaluating financial statements
and assessing internal controls. It allows them to provide
an impartial opinion on the fairness and reliability of the
financial information.
2. Public Trust: Independent auditors enhance public trust in
the financial reporting process. Stakeholders, such as
investors, rely on the auditor's opinion to make informed
decisions. The perception of independence is crucial for
maintaining confidence in the audit profession.
3. Professional Skepticism: Independence enables auditors
to exercise professional skepticism, which involves a
questioning mindset and critical evaluation of evidence.
This skepticism helps auditors identify potential risks,
errors, or irregularities in the financial statements.
E. Explain with relevant examples threats and safeguards of
professional ethics
a. Integrity
Threats
 Conflict of interest
 Pressure to achieve certain outcomes
 Lack of transparency
 And accountability
Safeguards:
 Having a strong code of conduct
 Promoting a culture of transparency and accountability
 Establishing an anonymous reporting system for ethical concerns
b. Independence:
Threats:
 Conflict of interest
 Undue influence or pressure from the audited
company
 Familiarity threat
Safeguards:
 Maintain professional skepticism
 Reporting to the professional bodies one belongs to
 Maintaining strict ethical guidance
D. Objectivity
Threats
 Cognitive bias
 Influence of emotions
Safeguards:
 Maintaining a questioning and critical mindset
 Establishing clear guidelines and ethical standards
E. Confidentiality
Threats:
 Unauthorized access to sensitive information
 Improper handling or sharing of confidential data
Safeguards:
 Implementing monitoring system
 Implementation of strong security protocols
ASSIGNMENT 7
1. Find the difference between compliance and substantive test.
Substantive tests focus on the underlying transactions and account
balances to determine if they are materially correct. These tests are
designed to obtain evidence about the completeness, accuracy, and validity
of the financial information. They help auditors detect any material
misstatements or errors in the financial statements.
On the other hand, compliance tests assess whether an entity has
followed specific laws, regulations, or internal policies and procedures.
These tests are performed to evaluate the effectiveness of internal
controls and ensure compliance with applicable laws and regulations.
In summary, substantive tests examine the accuracy of financial
information, while compliance tests assess adherence to laws and
regulations. Both types of tests are important in the audit process to
provide reasonable assurance about the reliability of financial
statements.
2. Difference between historical cost and current cost
Historical cost refers to the original cost of an asset or liability when
it was initially acquired or incurred. It represents the actual amount
paid or the fair value of the consideration given at the time of the
transaction. Historical cost is based on past transactions and is
recorded in the financial statements.
On the other hand, current cost refers to the present value or
replacement cost of an asset or liability. It represents the amount that
would be required to acquire or reproduce the same asset or settle the
same liability at the current date. Current cost takes into account
changes in market conditions and reflects the current economic value
of the asset or liability. In summary, historical cost is based on the
original cost of an asset or liability, while current cost represents the
present value or replacement cost. Both measures have their uses in
financial reporting and decision-making.
ASSIGNMENT 8
1. Methods of evaluating internal control.
When evaluating internal control systems, auditors use various methods
to assess their effectiveness. Some common methods include:
a. Documentation Review: Auditors examine policies, procedures, and
documentation related to internal controls to assess their design
and implementation.
b. Walkthroughs: Auditors trace the flow of transactions through the
system to understand how controls are applied and identify any
weaknesses or gaps.
c. Testing of Controls: Auditors perform tests to determine if
controls are operating effectively. This can involve sample testing,
re-performance of control activities, or examining supporting
evidence.
d. Interviews and Inquiry: Auditors interview key personnel to gain
insights into the control environment, identify potential risks, and
assess the effectiveness of controls.
e. Data Analysis: Auditors analyze data and perform statistical tests
to identify anomalies, patterns, or deviations that may indicate
control weaknesses or potential fraud.
f. Observation: Auditors observe control activities in action to assess
their effectiveness and identify any deviations from expected
procedures.
The specific approach of measuring internal control may vary depending
on the nature and complexity of the organization's operations.
Assignment 9
1 Draft an audit sample report
REPORT OF THE AUDITORS TO THE MEMBERS OF TOA
FURNITURES COMPANY PLC
Teslimat & co
14 December 2023
Area 1
Abuja.
Dear Toa Furnitures,
Audit Report for the Fiscal Year Ended 2023
We are pleased to present the audit report for Toa furnitures for the fiscal year ended 2023. This
report provides an overview of our examination of the financial statements, internal controls, and
compliance with applicable regulations.
Our audit aimed to obtain reasonable assurance that the financial statements are free from
material misstatement. We conducted our examination in accordance with generally accepted
auditing standards.
We have audited the accompanying financial statements of Toa furnitures which comprise of the
balance sheet as of 1st December 2023 and the related statements of income, changes in equity,
and cash flows for the year then ended. The financial statements are the responsibility of Timini.
Our responsibility is to express an opinion on these financial statements based on our audit.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of Toa furnitures as of 14th December 2023 and the results of its operations
and its cash flows for the year then ended in accordance with generally accepted accounting
principles.
We also assessed the effectiveness of internal control over financial reporting. Our evaluation
identified some errors, which we have communicated to Timini separately.
We conducted tests of Toa furnitures compliance with relevant laws and regulations. Based on our
tests, Toa furnitures has complied, in all material respects, with these provisions.
Management has provided responses to our findings and recommendations, which are included in
the appendix of this report.
In conclusion, our audit has provided a reasonable basis for our opinion on the financial statements.
We appreciate the cooperation and assistance received from Timini during the audit.
Please feel free to contact us if you have any questions or require further clarification.
Sincerely,
Teslimat Momoh
[Senior auditor]
Teslimat &co