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    Planning:: 2. External

    Uploaded by

    Raliza Bradecina
    NOTES FOR ISM

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    © All Rights Reserved
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    Planning:: 2. External

    Uploaded by

    Raliza Bradecina
    6 views2 pages
    NOTES FOR ISM

    Original Title

    Ism

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    © © All Rights Reserved

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    NOTES FOR ISM

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    6 views2 pages

    Planning:: 2. External

    Uploaded by

    Raliza Bradecina
    NOTES FOR ISM

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    1.

    Planning: Internal controls, financial reporting procedures, and the business environment of the
    organization are something that the auditor learns during this planning phase. This involves
    making decisions on materiality levels, formulating an audit plan, and assessing risks related to
    internal controls and financial statements. The audit plan will define its scope, objectives, and
    resources required, along with the means through which the audit needs to be performed.
    Planning, therefore, ensures that the audit is focused and effective and identifies areas that
    have a greater risk of misstatement or non-compliance.

    Execution: In this stage, auditors carry out audit processes that were elaborated in the planning
    stage. These include gathering and assessing evidence through one of the techniques, such as
    document examination, transaction testing, and internal control evaluation. Auditors perform
    substantive tests meant to verify the correctness of financial data as well as perform control
    tests to find out whether the mechanisms put in place within the company are working
    effectively. The findings are documented carefully to support conclusions about the audit.

    Completion: The gathered data is reviewed by the auditors to come up with the findings or
    conclusion about the financial statements or regulatory compliance at the end of the audit. They
    will verify their process outputs to make sure that all significant issues are noticed. The audit
    report is then produced and issued to present their evaluation and possible recommendations.
    Management could also be provided with a management letter that identifies areas that need to
    be improved either in the procedural working of the organization or in its internal controls.
    Ultimately, whatever problems are identified are communicated to the organization and it takes
    corrective measures. A follow-up may also be scheduled for ensuring that the recommended
    changes were indeed carried out.

    2. External: "External audit refers to the independent and objective analysis of an


    organization's financial records by auditors who are not affiliated with the business.
    They review the company's financial statements to ensure compliance with accounting
    standards and assess the effectiveness of internal financial controls. The auditors then
    issue a report expressing their opinion on the accuracy of the financial accounts. The
    outcomes of external audits are important for external stakeholders, creditors,
    investors, and regulatory bodies when making decisions about the organization."

    Internal: Internal audits focus on enhancing the company's overall governance, risk
    management systems, and internal controls. Conducted by either company employees
    or external contractors, internal auditors review and evaluate internal processes,
    procedures, and controls to identify areas of risk and make recommendations for
    improvement. Unlike external audits, internal audits do not provide formal opinions but
    instead offer management reports and recommendations to strengthen controls and
    achieve organizational objectives. The primary audience for internal audit reports is the
    organization's management and board of directors, who use the information to enhance
    internal procedures and control systems.
    Compliance: Compliance audits are essential for assessing an organization's adherence
    to external rules, laws, and contractual responsibilities. They ensure that the company
    complies with tax laws, environmental regulations, industry standards, and contractual
    terms. The audit findings include instances of non-compliance and recommendations for
    corrective action. The resulting report assists in settling disputes and avoiding fines.
    Regulatory bodies, management, and stakeholders use these reports to ensure
    conformance with standards and regulations.

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