This method of budgeting has a principle that the budget of each cost Centre should be justified from scratch. Every item of expenditure worthwhile must be justified in its entirety. It assumes that this year’s activity will not continue in the same way for next year. Therefore every item of expenditure must be justified before it can be included in next year’s budget.
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An auditor must not be seen to be negligible, he must be thorough in his work and if the auditor’s suspicions are aroused, he has to probe the matter to the bottom. He can do this by carrying out detailed tests to his personal satisfaction to either confirm or dismiss the suspicion.
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Hi guys , today we would be taking a look at the going concern concept in accounting and symptoms of impending going concern problems and how they can be mitigated. Now, let’s begin with the concept idea of going concern. According to the international standards on Auditing No 570, going concern is fundamental in the accounting profession. The going concern concept assumes that the client’s business will be in operational existence for the foreseeable future with neither the intention nor the necessity of liquidation ceasing trading or seeking protection from creditors in compliance with laws or regulations.
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Hi guys, it has been long I posted here, been so busy. Today I would be taking a look at the big 4 accounting firms. As accounting students, we quickly subscribed to the idea of finishing school and working for one of the big four’s. That was the ultimate dream and every one was fighting for the chance of being picked by any one of them. The big four’s as you all know are Deloitte Touche Tohmatsu Limited, PriceWaterhouse Coopers (PwC), Ernst & Young and Klynveld Peat Marwick Goerdeler (KPMG). Working in one of the above stated companies was highly coveted by all accounting students because apart from building your CV, it meant you stood tall with the elites in the accounting profession. It is similar to consulting where we have three major consulting companies namely Mckinsey & Co, Boston Consulting Group (BCG) and Bain & Co.
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The international standards on auditing can be classified into operational standards, reporting standards and personal or ethical standards.
The operational standard must be applied whenever an audit is being performed. In a bid to help auditors in the application of the standard, the following were used and advised to be followed.
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Today we would be looking at the differences between an internal audit and an internal control system. We would begin with the internal audit and then progress to internal controls and immediately after, check out the functions of each one of them.
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According to the conceptual framework, the following are the two concepts of capital maintenance.
What are analytical procedures as it relates to Auditing? With the help of the International standard of Auditing, we are able to arrive at a uniform definition. According to the International Standards for Auditing 520, Analytical procedures mean evaluations of financial information made by the study of plausible relationships among financial and non-financial data. The procedures also encompass the investigation of identified fluctuations and relationships that are inconsistent with other relevant information or deviate significantly from predicted results.
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In auditing, an auditor cannot just form an opinion on the state of a company’s financial statements without first gathering information and analyzing if the information gathered corroborates with the assertions by the company’s management in the financial statement of the company.
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Letter of credit is an assurance by a bank to guarantee payment to a specified person under specified conditions. Letter of credit is mostly used in international trade, due to the risk of default by the buyer. A letter of credit as such provides complete financial security to the seller (the beneficiary). In a letter of credit, the bank assumes payment obligations on behalf of the buyer.
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