Conceptos de auditar (ingles)

Auditing

Why is auditing needed in today’s society?
Because of information risk which is the possibility that information upon which a business decision is made, is inaccurate. There are 4 causes of information risk:
1. remoteness of information,
2. biases and motives of the provider,
3. voluminous data, and
4. complex exchange transactions

Factors that are likely to significantlyreduce information risk in the next five to ten years are:
5. technological advances,
6. more companies will go on-line, reducing the risk of investors obtaining outdated information,
7. new accounting and auditing standards
8. auditors will find more efficient and effective audit techniques

Attestation service: Any service in which, the CPA(Certified Public Accountant) issues a report aboutthe reliability of an assertion ( a declaration or a claim embodied in the form of some information) that is made by another party.

Common types of attestation services are:
1. Audits: requires the accumulation and evaluation of evidence about some information to determine and report on the degree of correspondence between the information and established criteria.
The informationbeing audited should be in a verifiable form.
Established criteria are some standards (GAAP established by FASB) by which the auditor can evaluate the information.
Evidence is any information used by the auditor to determine whether the information being audited is stated in accordance with the established criteria.
There are 3 types of audit:
a. Financial statementaudits: the financial information in the company’s financial statements (3 most common audit is on Balance sheet, Income statement, Statement of cash flow). The criteria used are accounting principles generally accepted in the United States. An example of a financial statement audit would be the annual audit of IBM Corporation, in which the external auditors examine IBM’s financial statements todetermine whether those financial statements are stated in accordance with U.S. and generally accepted accounting principles

b. Effectiveness of internal control over financial reporting: for public companies only, requires auditors to attest to the effectiveness of internal control over financial reporting. This evaluation, which is integrated with the audit of financial statements, providesforward-looking information, because effective internal controls reduce the likelihood of future misstatements in the financial statements.

c. Operational audits: an examination of part of an organization’s procedures and methods for the purpose of evaluating efficiency and effectiveness. An example of an operational audit would be an internal auditor’s evaluation of whether thecompany’s computerized payroll-processing system is operating efficiently and effectively.
http://www.theiia.org/

d. Compliance audits: to determine whether an entity is following specific procedures or rules set down by some higher authority. An example of a compliance audit would be an IRS auditor’s examination of an entity’s federal tax return to determine the degree ofcompliance with the Internal Revenue Code.

1. Reviews: a less extensive examination providing a lower level of assurance about a company’s financial statements. http://www.dsbcpas.com/services/accounting/review/reviewopinion.html

3. “Other” attestation services: “WebTrust” and “SysTrust”, here the CPA is not required to issue a written report, and the assurance is about the reliability andrelevance of information.

Auditing is a specialty within accounting profession done by a competent and independent person called auditor.

Competent means to know the types and amount of evidence to accumulate to reach the proper conclusion after the evidence has been examined. Competency is acquired through education, certification, work experience and continuing education.

Independent means...