Unit 4 auditing and auditors

TEXT 1. THE DISTINCTION BETWEEN AUDITING AND ACCOUNTANCY

TEXT 2. SETTING ACCOUNTING AND AUDITING STANDARDS INTERNATIONALLY

TEXT 3. WHAT IS AUDITING

TEXT 4. AUDITING AND AUDITORS

TEXT 5. AUDIT PROCESS

TEXT 6. AUDIT REPORT

TEXT 7. BIG FOUR AUDITORS

Text 1 the distinction between auditing and accountancy

Exercise 1.1

Study the vocabulary:

1	а course	1	курс
2	acute	2	гострий
3	available	3	наявний
4	applicants	4	претенденти
5	CIS countries	5	країни СНД
6	to date from	6	відноситися до певного часу
7	entry	7	вступ
8	ethics	8	етика
9	extramural	9	заочний
10	to exceed	10	перевищувати
11	external	11	зовнішній
12	full-time students	12	студенти денного відділення
13	goods management	13	товарознавство
14	internal	14	внутрішній
15	IT systems	15	системи інформаційних технологій
16	theory	16	теорія
17	valuation techniques	17	методи оцінки

Exercise 1.2

Read and translate the text:

Auditing may be defined as the examination and testing of financial statements. In all countries of the world society relies heavily auditors for credible financial reports. In Britain, for example, all public corporations and many companies applying for sizable loans must have their statements audited. The same holds true for Russia as well.

The main objective of auditing is to give the auditor's professional opinion as to whether the company's financial reports correctly present its financial position Auditors are known to check and test all accounting records. In order to do that they must prove cash balances, confirm physical inventories and verify the amounts owed by customers Apart from that auditors must also decide whether the company's records are kept in accordance with accepted accounting practice.

It should be said that an audit can start only once necessary accounting work has been completed. However, in practice, especially 'in the case of small companies, the distinction, between auditing and accounting work is not clearly appreciated. This is determined by the fact, that small companies have very often limited book-keeping capabilities. So, it is always tempting for them to leave things to the auditor to complete. It should be clearly understood that preparation or completion of accounts is the accountant's task and not the auditor's.

Thus, although many accountants readily undertake both accounting and audit work, these tasks are undertaken with different objectives in view. It would, however, be quite wrong to infer from this that accounts preparation work provides no audit assurance. It is now generally accepted that the assurance derived by auditors from preparing accounts contributes greatly to the overall assurance required. And that in its turn allows reduced testing in other areas.

Exercise 1.3

Read the text again and choose the best variant:

1. Auditing is defined as…

a) the examination and testing of financial statements

b) the science about tax revenues

2. The main objective of auditing is…

a) to give partly information about the financial reports of a company

b) to prove cash balances and verify the amounts of the companies

c) to give the auditor’s professional opinion in this sphere

3. Auditors are known …

a) to describe the financial situation of a company or a firm

b) to check and test all accounting records

c) to prove cash balance

4. Preparation or completion of accounts is…

a) the auditor’s task

b) the financier’s task

c) the accountant’s task

5. The assurance is derived by auditors from preparing…

a) balance-sheets

b) financial reports

c) accounts contributes to the overall assurance required

Exercise 1.4

Fill in the gaps from the table. Then read and translate:

reports auditors reports accordance inventories corporations records testing objective practice

Auditing may be defined as the examination and …1… of financial statements. In all countries of the world society relies heavily …2…for credible financial …3…. In Britain, for example, all public …4…and many companies applying for sizable loans must have their statements audited. The same holds true for Russia as well.

The main …5…of auditing is to give the auditor's professional opinion as to whether the company's financial …6…correctly present its financial position Auditors are known to check and test all accounting. In order to do that they must prove cash balances, confirm physical …8…and verify the amounts owed by customers Apart from that auditors must also decide whether the company's records are kept in …9… with accepted accounting …10….

Exercise 1.5 Read the whole text again and choose the best answer:

1. How may auditing be defined?

a) as the science about financial reports

b) as the science of examination and testing of financial statements

2. What is always expected from auditors?

a) auditors have to check and test accounting records

b) auditors have only decide whether the company’s records are kept

3. What is the main objective of auditing?

a) to give the auditor’s professional opinion in auditing

b) to prove cash balances and verify the amounts of the companies

4. What must auditors do to check and test records?

a) they must prove cash balances only

b) they must not only prove cash balances but confirm physical inventories and verify the amounts owed by customers

5. Is preparation or completion of accounts the auditor’s task?

a) preparation of accounts is the auditor’s task

b) preparation or completion of accounts is the accountant’s task