Running Head: AUDIT REPORT
Independent Auditor’s Report
Independent Auditor’s Report
To the Management of the XYZ Group
We have audited the group financial statement of XYZ Group for the year ended 2017. The financial statements involved comprise the balance sheet, the statement of comprehensive income, the annual cash flows rate, the changes in equity. The report further captures a brief account of the influences of the accounting policies in place and their efficiencies in enhancing and accelerating the organization’s goals. The financial reporting structure that has been engaged in the determination of the report comprises the ACC Workplace Safety Management Practices Programme (WSMP).
Management’s Responsibility for the Financial Statements
The directors body of the XYZ Group is responsible for the preparation of the financial statements which reflect the true accounts of the transactions that took place during the period involved. Additionally, they are also responsible for the projection of the satisfaction that the subject financials statements are valid. Lastly, it is the duty of the directors to ensure that the financial statements are free of unintended and intended error to enhance the validity of the findings that are derived from the initiative. The directors’ presentation of the financial statements is aligned with the Australia/New Zealand Standards for Occupational Health and Safety Management Systems (AS:NZS4801:2001) (Van Peursem, 2004).
Our major responsibilities are to determine the appropriateness of the financial transactions that took place within the subject duration as well as the determination of the validity of the financial statements presented. We are additionally tasked with the expression of an opinion on the financial health of the XYZ group in accordance with the applicable legal policies under the Health and Safety in Employment Act of 1992 (Hay, Knechel & Li, 2006). The ACC standards require that we organize and execute the audit in a manner that will produce reasonable assurance on whether the financial statements do not contain material doctoring from any of the involved directors or employees. We are further obligated to report any form of misdemeanor that was exhibited by the involved parties during and after the assessment of the subject financial statements of the XYZ Group.
The audit process entails the engagement of strategies and frameworks that will aid in the obtaining of facts and evidences on the details that are found in the presented financial assignments. The procedures engaged in the audit process are the subject of our discretion. Essentially, our discretion will influence the assessment of the possibilities of unintended or intended error in the financial statements. In the determination of the possibilities of the subject errors, we will reflect on the internal control elements that may influence the succinct analysis and presentation of the involved financial statements. The reflection is intended for the presentation of a design audit that is responsive to the needs of the current assessment.
Nonetheless, the reflection will not provide the metric by which the internal control measures within the organization are applied. Thus, we do not extend an opinion on the management of the subject entity. Regardless of the reflective limitations, our audit will involve the evaluation of the effectiveness of the accounting policies that are engaged within the organization (Van Peursem, 2004). We further engage and interact with responsible institutions on matters pertaining to the planned scope and timing of the review process as well as the findings derived from the analytical process. Additionally, we will assess the accounting estimates that had been made by the directors in the presentation of the final statements for auditing. This will be achieved through the comparison of the final findings on the assessment and the initial estimates that had been determined by the directors.
It is our belief that the audit findings determined upon after our assessment will reflect the true state of the financial statements. We further believe that the findings on the financial statements will provide a credible basis for the opinion that we will have settled upon.
The assessment of the financial statements will entail the direct examination of the figures that were involved in different transactions within the year ended December. The audit will examine the profits or losses that were incurred during the subject period and the departmental financial results that project a discrepancy. Additionally, the report will seek to establish the estimates that had been settled upon by the directors of the company. These estimates will be compared to the final tally of the financial transactions. The estimates represent the director’s projections based on their own analysis of the transactions that were engaged by the company in the subject financial year. It is a reflection of the results that are expected by the organization after the conclusion of the review process. In the event of a discrepancy, the audit will seek to identify the affected segment in the XYZ group and the individuals that were responsible for the management of the subject transactions. The report will determine its findings of the evaluation process on all segments of the organization that were assessed. Lastly, the report will offer some recommendations on ways through which the subject discrepancies can be mitigated in the future. The report will further offer insights on factors within and outside the organization that provided an impediment to the successful completion of the analytical process. These factors will be used as the platform by which future occurrences of embezzlement and fund misuse are avoided.
The analysis process entailed the use of several equipment which aided the determination of findings on the financial statements. Some of the equipment entailed analytical software through the use of the computer. Some of the software involved in the analysis included SPSS and Microsoft Excel. Additionally, the examination process involved balance sheets, invoices, debit and credit cards as well as the payment structure availed by the organization. The counsel of the directors and the staff further provided indispensable tools in the drafting of the final findings of the analysis. Essentially, the audit process was conducted with regards for the opinions and counsel of the employees who had overseen the transactions that were analyzed during the entire session. Lastly, the audit entailed the use of financial documentation stored by government agencies that are in contact with the subject organization (Hay, Knechel & Li, 2006). The tax compliance documents aid the determination of the credibility of the transactions that were engaged by the company within the duration involved in the analysis. Additionally, it serves to reinforce the legality of the operations and financial transactions that are conducted by the involved. organization. Principally, the report inclined itself to resources that would suffice the purpose of verifying the state of finance for the XYZ Group and the establishment of solutions on ways through which the financial situation of the subject organization can be maintained or improved.
The directors of the XYZ estimate that there is a discernible and credible flow of finances across all segments of the organization. They further expect a determination of profits from the initiatives that were instituted and affected during the subject financial year. The assessment of the organization’s finance is further expected to yield results that point towards efficiency of the operations that are undertaken within the organization.
In our opinion, the financial statements reflect the true and fair account of the state of the XYX Group’s affairs as at December 2017, and of its profit or loss and cash flows for the year ended in line with the Australian/New Zealand Standard for Occupational Health and Safety Management Systems (AS:NZS4801:2001). Additionally, the opinion on the financial statement is predicated on the Health and Safety Employment Act of 1992 (Van Peursem, 2004). It is aligned to the promotion of the legal policies that guide the financial assessment initiatives and to further the credibility of the evaluation processes that are instituted to reinforce accountability.
The findings of the audit process were divided into two segments. The initial segment comprises of the efficient processes and departments within the XYZ Group. The efficient segments document the areas of the organizations that performed well and the transactions that could be traced and analyzed. Furthermore, it documents the departments that successfully oversaw the determination, completion and successful recording of financial transactions that affected the organization. The efficient segment provides an insight into the correct transactions and further comprises the standards by which the ineffective segments in the organization are measured. Alternatively, the findings document the areas of the organization that require improvement in order to further the efficiency of the financial services and transactions that are engaged by the XYZ Group. The analysis of the segments that require improvement provide an alternative view of the progress of the company and further determine the initiatives that can be engaged to further the successes f of the XYZ Group.
- Efficient Segments
The analysis of the balance sheets showed an alignment of the credit and debit sides of the involved documents. Principally, the assets that are available to the organization transcend the loans and debts owed to other institutions by the organization. The alignment points to a credible analysis process that is reflective of the validity of transactions that were engaged by the organization within the annual term. Additionally, the assessment of the invoices available to the organization, and overseen by the staff in several departments, determined a succinct flow of financial transactions which points to the absence of intended error on the parts of the directors and the employees that formed a part of the analytical process.
Alternatively, the assessment of the tax compliance forms established a correct documentation of the taxes that were remitted to the state agencies for the months of June and July. Therefore, the rates that were truly expended to the state revenue department were equal to the rates that had been captured in the organization’s tax compliance forms. The assessment further attempted to streamline the current financial statements to the financial statements that were settled upon in the previous financial year. Previous reviews on the financial performance of the organization were also taken into account and used in the determination of the final findings. The review of the previous audits determined a coherence in the financial sheets such as the balance sheet where the capital was carried forward from the previous financial year to the current financial year. The assessment of the policies within the organization intended to protect against financial mismanagement and employee dishonesty determined that the organization’s pre-emptive frameworks were very effective.
- Segments that Require Improvements
We determined several segments of the organization that require improvements. The segments which require a review and improvement are listed below:
- To begin with, we established that there is need for the improvement of the monitoring and supervision initiatives that are extended towards the tracking of financial transactions on behalf of the organization (Soudani, 2012). Most of the transactions, even the significant once, were overseen by the lowest ranking members of the organization. Regradless, there was no follow up on the credibility and validity of the transaction that had been made. This provides a recipe for embezzlement and theft.in the organization. The absence of succinct and comprehensive monitoring initiatives provides an impediment to the successful monitoring of the initiatives that are undertaken for purposes of securing profits for the organization.
- Secondly, employee empowerment and education on the financial management initiatives failed to meet the threshold set for organizations that address more than 5 clients. To further enhance the profit making initiative, it is necessary that the organization undertakes to train and empower its employees on the need to adopt the best practices in recording, monitoring and overseeing financial transactions (Hay, Knechel & Li, 2006). The initiatives improve employee morale and furthers their willingness to ensure that the organization’s financial transactions are streamlined to produce profit. Intrinsically, the empowerment of the employees furthers their willingness to further engage the directors in the event of discrepancies on the financial statements or any other financial documentation. The success of the employees with regards to educational empowerment will largely depend on the management’s countenance in the attempt to mitigate cases of fraud and embezzlement within the organization.
- The storage and documentation of the financial transactions further requires a revision. The XYZ Group should engage a centralized computer finance system that stores data on the daily transactions of the business (Singh et al., 2014). The use of computers in storing and overseeing transaction, with a central database, ensures that the employees are not able ti doctor figures after their submission to the system. The manual recording of transaction is susceptible to doctoring which negates the successful recording, monitoring and review of the financial position of the organization. Storage databases further ease the rate by which financial information is retrieved which accelerates the transactions and review processes. Additionally, the use of encryption, availed by the management of the organization, to streamline the recording and retrieval processes, enhances accountability and mitigates the occurrences of behavior that betrays the ethical demands of the subject institution. Overall, it is of immense importance that the organization engage a computer system that allows for the storing of data while limiting the retrieval of the same to prevent pilferage of the organizational resources. The engagement of a central database prevents the possibilities of misuse of the data for individually-inspired duties. Rather, since it entails the solicitation of permission by the management, it mitigates the occurrence of pilferages on the organization’s financial resources.
The report on the XYZ Group was sanctioned by all the stakeholders involved in the initiative. The audit in the report entailed the examination of a staff that comprised of less than 20 people. It was effected in line with the Health and Safety in Employment Act of 1992. Additionally, it was conducted to meet the standards that had been set forth by the ACC Workplace Safety Management Practices Programme (WSMP). IOt was intended to verify the credibility of the financial transactions that had been engaged by the XYZ Group in the year 2017. The initiative was further intended to identify the segments of the organization that were not fully streamlined to aid the profit-making purposes that the organization had determined for the current year financial duration. To begin with, the managers extended their permission and estimates on the results of the audit which paved way for the succinct analysis of the financial situation in the subject organization. Furthermore, the other staff members were directed to extend us all the opinion and services needed to oversee the success of our efforts. The examination of the financial books available to the XYZ group determined that the organization had been consistent in the financial transactions that it conducted within the year. The financial statements reflected an improvement compared to the results derived from the previous two years’ audits.
Overall, the XYZ Group projects a healthy situation with regards to the financial assets and records. The company had more profits within this annual period than in the other financial year. This result was determined after the comparison of the financial books in the previous audit period and the current audit period. The company needs to keep on with the current financial transactions and exchanges to ensure that the current profit rates are maintained in the long run. Additionally, the examination of the balance sheet resulted in a balanced credit and debit rate. The result is an indication of the higher number of assets and debtors that the company has over the creditors and liabilities that the company owes financial services to.
Alternatively, the audit determined several areas within the subject organization that called for an improvement. To begin with, the audit revealed an inadequate monitoring and supervision framework within the organization. The success of the financial transactions within the organization are determined by how well the directors of the organization are able to trace the financial transactions. Monitoring and supervision provide an indispensable element in the management initiatives and it is therefore of utmost importance that there is a streamlined assessment and supervision framework that specifically addresses the financial transactions that are overseen by the organization. The implementation of the monitoring and supervision frameworks ought to involve all the employees in the XYZ Group in order to effectively curb all points in the operations that may be manipulated to further individual interests rather than the interests of the group. The audit further established the need to engage computer documentation. Engagement of a centralized database that stores all the transactions eases the traceability of the financial processes that are engaged in the subject company. The database ought to be availed for access by all the individuals who form part of the organization. A database provides a platform through which all information that appertains to the official businesses of the organization are maintained.
We offer the following recommendations and suggestions aimed at improving the financial monitoring and coherence at the XYZ Group:
- Determination of a central database to store all the information that pertains to the transactions that are overseen by the employees of the XYZ Group. This will enhance the speed and efficiency through which past information is retrieved.
- Establishment of a department within the XYZ Group that is tasked with the duty of monitoring all the financial activities that are undertaken within and outside of the organization. The initiative will serve to streamline all the financial transactions and recording.
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Van Peursem, K. (2004) Internal auditors’ role and authority: New Zealand evidence. Managerial Auditing Journal, 19 (3), 378-393. https://doi.org/10.1108/02686900410524382
Singh, K., Best, P. J., Bojilov, M., & Blunt, C. (2014) Continuous Auditing and Continuous Monitoring in ERP Environments: Case Studies of Application Implementations. Journal of Information Systems 28 (1), 287-310.
Soudani, S. N. (2012). The Usefulness of an Accounting Information System for Effective
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