
Frequently Asked Questions
General Audit FAQs
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An audit is an independent examination of financial information to provide assurance that it is free from material misstatements and complies with applicable standards.
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Companies require audits to comply with legal obligations, provide credibility to financial statements, and assure stakeholders of their accuracy.
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Qualified external auditors or audit firms, registered andregulated by professional bodies (e.g., ICAEW in the UK), conduct audits.
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Internal Audit: Performed by in-house teams focusing on improving internal processes and controls.
External Audit: Conducted by independent auditors to provide assurance on financial statements.
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Financial Audit
Compliance Audit
Operational Audit
Forensic Audit
Information Systems Audit
Audit Process FAQs
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Planning
Risk assessment
Gathering evidence (substantive and control testing)
Evaluation of findings
Reporting
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The timeline varies based on the size and complexity of the entity, but it generally takes a few weeks to months.
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Trial balance
Financial statements
General ledger
Bank statements
Contracts and agreements
Invoices and receipts
o Board minutes
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Material misstatements: Reported to management and adjusted if possible.
Immaterial errors: Highlighted but may not affect the audit opinion.
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Unqualified (Clean)
Qualified
Adverse
Disclaimer
Audit Standards & Compliance FAQs
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ISA (UK): International Standards on Auditing (UK)
FRS 102: Financial Reporting Standard applicable to UK entities
Companies Act 2011
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By adhering to ethical standards (e.g., FRC Ethical Standard) and avoiding conflicts of interest through ‘Chinese walls’ and rotation policies.
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Materiality: The threshold for errors/omissions that could influence decision-making.
Risk: The likelihood of material misstatements due to error or fraud.
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It outlines the auditor’s responsibility to consider fraud in financial statement audits.
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By evaluating the company’s ability to meet obligations and remain operational for the foreseeable future (typically 12 months).
Client-Specific FAQs
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Auditors aim to minimize disruption by planning and coordinating with management.
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No, per ethical standards, auditors cannot provide non-audit services like account preparation for the same entity to avoid conflicts of interest.
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Fees are based on the complexity, size, and industry of the entity and the scope of work.
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Non-compliance with statutory audit requirements may lead to penalties and loss of stakeholder confidence.
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Yes, if the audit opinion is disputed, management can engage with the auditor to address concerns.