Auditing. Auditing is a very ancient activity

Auditing is a very ancient activity. “Audit” is a Latin word that meant

“he hears”. In ancient times auditing was the process whereby the owner

heard the account given by his steward of the use of the owner’s resources.

The origin of stewardship goes far back into the Middle Ages. It was

the original purpose of accounting and was also called ‘accountability’.

Kings or lords who were away at war or for other purposes usually left

their estates in the hands of a steward. The steward kept record of pay-

ments and receipts and rendered an account to the owner, who might be

illiterate and had to hear it.

In the early days of auditing the prime qualifications for the position

of an auditor was reputation. A man known for his integrity and inde-

pendence of mind took this honoured position, the matter of technical

ability being entirely secondary. In those days, the function of auditor was

never confused with that of accountant. However, as accounting gradu-

ally became more complex, auditors became increasingly dependent on

the expertise provided by accountants. Eventually, the audit function

itself became totally dominated by the accountancy profession. By the

19th century, many owners of businesses appointed one of their members

to be an auditor of the financial statements prepared by the directors of

a company. This was partly because the process of auditing had become

more complicated as business itself became more complicated.

In its modern sense, an audit is a process (carried out by suitable

qualified auditors) whereby the accounts of business entities including

limited companies, trusts, etc., are subjected to scrutiny in such detail

as will enable the auditors to form an opinion to their truth and fairness.

To put it differently, its main aim is to give an opinion on whether the

financial statements drawn up by the directors of a company give a fair

presentation. This opinion is then embodied in an “audit report”. In or-

der to do this, an auditor needs to check the physical existence of inter-

nal control to ensure that transactions are likely to have been recorded

correctly. If internal control is poor, he will ask for it to be improved and

he will increase the amount of checking done on sample transactions. If

the control systems look good, relatively small samples of various types

of transactions may be checked.

Auditors would generally be expected to circularize a sample of the

debtors to confirm that they exist. He would normally attend the count

of the inventory. The rules for auditing are usually set out in auditing

standards.

The qualifications that auditors must have are set down: membership

of a CPA body in the US, or in the UK membership of one of four of the

bodies of the consultative committee of the accountancy bodies. Audit-

ing is carried out by individuals or forms which vary greatly in size. Some

firms have hundreds of partners and thousands of stuff.

3. Read the text again and draw up an outline of it by identifying key

sentences in each paragraph.

4. Describe the main aim of auditing.

5. Give a list of the main functions of auditors.

6. What qualifications are auditors required to have in the USA?

7. What do you know about auditing profession in the Republic of Belarus?

Text 5

1. Before you read the text, brainstorm the following issues in small groups:

– Why do the issues of business ethics draw so much attention nowa-

days?

– What can organizations do to enhance ethical behaviour?

Then read the text and compare your ideas with those of the author.

Date: 2015-12-13; view: 819; Нарушение авторских прав