The basic purpose of an audit is to express an opinion on its internal control systems and how effective and operational they are. The basic rules of auditing recommended by audit firms in Abu Dhabi are Objectivity, Access to information, Reporting deficiencies, Independence, and Due Diligence. In addition, the auditor must be sincere, honest, and free from all conflicts of interest. The auditor also must maintain the confidentiality of all information obtained. He should never share any information he obtains without the client’s permission. However, an auditor may share information if necessary for the purpose.
The objectivity principle in an audit is important to an auditor’s role, as it allows them to see the whole picture. The income statement shows a firm’s revenues and expenses and its net profit and gross profit. The balance sheet reflects a firm’s financial status as of a particular date. This document also identifies the firm’s ownership, liabilities, and equity. Finally, the cash flow statement shows the company’s inflows and outflows.
Access to information:
The IESBA International Code of Ethics for Professional Accountants contains some fundamental rules for auditors. These rules, known as the International Independence Standards, require auditors to follow the conceptual framework of the code and recognize threats to these principles. In addition to following the code, auditors must be alert to new information and changes in facts and circumstances. One of these threats is a lack of access to information. A company must provide its auditors with access to information to ensure that they are not compromising its independence.
Defects in internal control can have disastrous consequences. A failure to identify and correct internal control deficiencies can destroy public confidence in a company, destabilize capital markets, and damage the company’s reputation. This article will look at why identifying internal control deficiencies is so important and provide some tips for evaluating internal controls.
Auditors’ responsibilities are not limited to determining whether controls are in place. The process of testing internal control systems is called audit sampling. The auditor examines a random sample of documents overtime to find whether they are uniformly signed or show signs of review. If there is little or no uniformity in the signatures, the internal control system is probably not operational and effective.