Parties On Report That Has Been Audited †Myassignmenthelp.Com

Question: Discuss About The Parties On Report That Has Been Audited? Answer: Introducation Privity letters are the letters that are requested by the third parties from the auditor. Privity letter is a letter from the part of the auditor that acknowledges the reliance of the third parties on the report that has been audited. The purpose of the letter has been to construct a relationship with the demanded proximity and the foreseeability thereby creating a care of duty by the auditor towards the third party (Junior, Best and Cotter 2014). AGS 1014 gives out guidance with respect to the privity letters. The auditor responds undeniably for a privity letter by explaining that the body of the investors or the shareholders is the solitary group who is authorized to be dependent on the audit report. There are added factors that are given to the state and why it has been irrational for the third party to depend on the audit report as deemed management. The performance reviews and applications controls is accurate for the organization as the payrolls are paid at fortnightly and review of the performance would improve effectiveness of the organizations and would eliminate any mistakes in the control accounts and in the payroll. The payroll journal is processed by the accounting department in an effective manner with the help various accounting tools and software in effective manner and thereby eliminates any human error that is available in the journal. The control accounts are maintained and assessed on a monthly basis that assists in making sure that the amount paid is corresponding to the payroll accounts. The amount that is paid is in accordance to the payroll amounts as the amount in the payroll is accurate. This amount has been paid in respect to the payroll accounts and the control accounts are maintained in order to keep track and records of the payments and to ensure that no mistakes are available in the accounts thereby maintaining effective payroll structure of Stent Ltd. The monthly assessment of the control accounts ensures that the accounting statements are maintained effectively and all the income and expenditure of the firm is maintained in order to identify the profit for the firm. It can therefore be said that all the eight steps that have been discussed are maintained effectively so that payroll system of the organization is maintained effectively and the employees receive their wages effectively The various kinds of audit procedures are given as follows: Planning Testing controls and Transactions Testing Balances Reporting Each of the audit procedure can be given given with the help of an example and each one of them would be discussed accordingly. Planning: In this aspect, it is essential to explain the industry and the company to the auditor. The role of the auditors has been to assess business internal control system and to recognise the regions that have higher risk probability like handling the cash and processing systems (Knechel and Salterio, 2016). Testing controls and transactions: The auditors will examine the internal controls and scrutinise the properties and the accuracy of the transactions (Simnett, Carson and Vanstraelen 2016). The auditors even count the inventory, cash and the various other resources in order to approve the counts. Testing Balances: The auditors evaluate the performance of the organization making use of the financial ratios and even the statistical sampling. For instance, the auditors may construct the effective total and the wages that are taxable making use of the records of the earnings and undertake a comparison of the figures that have been recorded. Reporting: The auditors draft the report which comprises of a synopsis of the results and informing the organization about any risks and compelling the organizations to improve the figures that have been reported (Moroney et al. 2014). Reference List Junior, R.M., Best, P.J. and Cotter, J., 2014. Sustainability reporting and assurance: A historical Account on a world-wide phenomenon. Journal of Business Ethics, 120(1), pp.1-11. Knechel, W.R. and Salterio, S.E., 2016. Auditing: Assurance and risk. Taylor Francis. Moroney, R., Campbell, F., Hamilton, J. and Warren, V., 2014. Auditing: A Practical Approach. Wiley Global Education. Simnett, R., Carson, E. and Vanstraelen, A., 2016. International Archival Auditing and Assurance Research: Trends, Methodological Issues, and Opportunities. Auditing: A Journal of Practice Theory, 35(3), pp.1-32.