CHAPTER 3

1. Visit the Websites of four external audit organizations: two private and two
government sites. Provide a summary of who they are and their roles, function
and responsibilities.

Mantilla-Roja Accounting Firm (MRAF)

As a reliable accounting solutions provider, MRAF offers a full range of
bookkeeping and accounting services for micro, small and medium enterprises, and
large entities. Depending on your companys needs, we partner with you as your
bookkeeper, accountant, controller, business advisor, part-time CFO or the entire
department. All of our accounting services are scalable during periods of peak activity,
and then can be scaled back when they are no longer required. By partnering with us to
help you manage key non-core functions, you can concentrate efforts on maximizing
your core business, which is essential to businesses that are positioned for growth.
Once you experience our online accounting and online bookkeeping services, youll
discover why we are the accounting service provider that all our clients recommend.

Pacheco, Apostlico y Asociados

Efficiently services small, medium and large businesses and our fees are
proportionate to the benefit received from these services. An audit performed by
Pacheco, Apostlico y Asociados, is supported by our thorough knowledge of the
industry in which the client operates and by our broad experience and network of global
experts. The objective of a financial audit performed byPacheco, Apostlico y
Asociados, goes beyond the review of financial statements.Our audit opinion keeps the
Board of Directors, management, shareholders and stakeholders informed of the
companys equity and financial position, as well as its operations and organizational
structure for better control and safekeeping of assets. As part of our services, we
continuously communicate with upper management to timely identify matters that might
affect the companys financial position or control over its operations. We also provide
our experience to address problems and deviations identified within our traditional
framework of confidentiality.
KPMG
An independent audit is the foundation for decision-making in todays capital
markets. The overarching objective of the Audit practice of KPMG in the Philippines is to
enhance the reliability and clarity of information that is intended for use by investors and
other stakeholders while complying with all applicable statutory regulations and the
highest professional standards. The methodology employed by our audit professionals,
the KPMG Audit Methodology (KAM), facilitates and enhances audit quality by focusing
on delivering independent, rigorous audits, meeting applicable local and international
accounting standards, providing a basis for a consistent risk-based audit approach.
Our audit professionals are especially alert to key areas of risk, based on a
companys operational characteristics and performance profile, and we look closely at
all aspects of financial reporting to better isolate risk. Financial reports alone do not
adequately communicate business opportunities or risks. Therefore, we offer assurance
and attestation services that can help your organization define, capture, and report both
financial and non-financial information.
We also provide independent assurance to the reliability or validity of information
relating to products, services or activities. This helps safeguard reputations, build trust
among stakeholders, and improve corporate performance.

Roles & Responsibilities of External Audit Firms

Providing an Opinion on Financial Statements

Some managers assume external audit firms will create their financial
statements, when that actually is the job of company managers. External audit firms are
responsible for providing reasonable assurance that the financial statements are free
from material misstatements and prepared according to an accounting framework.
External auditors are not there to fix the problems, although many will issue
recommendations to management. External audit firms also are not responsible for
providing absolute assurance of perfect financial statements; they only test enough data
to provide reasonable assurance.

Understanding the Entity and Its Environment

Although accounting is typically seen as number crunching, auditors recognize

that financial statements don't exist in a vacuum. External auditors are charged with
obtaining a thorough understanding of their client's environment, operations and internal
controls. To do this, auditors will perform an initial risk assessment of the company.
External auditors will often examine the electronic accounting information system to
ensure that the data aren't being compromised. They'll compare the company to others
in the industry to identify any irregularities that could stem from incorrect financial
reporting.

Obtaining Sufficient Evidence to Form an Opinion

External auditors base a huge portion of their opinion on the evidence they
examine during the audit. To ensure they've collected the sufficient amount of evidence,
auditors should rate the riskiness of the client. The higher risk the client is, the more
evidence they should collect before issuing an opinion. The quality of the evidence is
also crucial. Some evidence must be obtained from reliable third-party sources, such as
banks and lenders, to corroborate the client's financial information.

Independence

The audit firm is responsible for maintaining an independent attitude and an

appearance of independence from the client. A lack of independence means that the
auditor might fail to address audit problems, which lowers the credibility and assurance
of an external audit. The auditor should not serve as an officer for the client or
participate in management of the client's company. Audit firms also shouldn't have any
sort of financial interest in the client. Audit firm partners should ensure that none of their
auditors have joint ventures or significant investments in the client before auditing the
client.

Importance of an External Audit

Ensures Compliance

External auditors help you determine whether your small business is in

compliance with all applicable Internal Revenue Service rules. An external auditor is not
affiliated with your company and thus can redirect your company's behavior without fear
of repercussions if you don't like what he has to say. An external auditor can catch small
problems before they become serious and help your business get back on track.

Provides Credibility

Your financial statements will be more credible if an external auditor evaluates

them and agrees that they are accurate. Credibility is important to small businesses,
especially during their first few years of business, when they are trying to build positive
reputations. Because external auditors don't work directly for your company, they are
less biased. Thus, an external auditor's approval of your financial statements is more
credible than that of an internal auditor.

Critique Internal Processes

Internal auditors can't effectively critique the company's internal processes

because they are part of the company. External auditors, however, can observe
operations from the outside and determine where the company is wasting time or
money. External auditors often critique accounting practices and general operations.
They can recommend behaviors to the company to reduce waste or promote greater
efficiency in general as well as tighten accounting practices.

Double-Check Internal Audit

Internal auditors may be too close to the business because of their positions
within the company. Some internal auditors also don't have enough accounting
experience to accurately audit their company's financial statements. External auditors
can look at the same factors as internal auditors and double-check their work. They can
also train internal auditors in accounting principles by explaining how their analysis
differs from the analysis the internal auditor performed.
2. Visit the websites of two internal audit organizations: two private and two
government sites.

Internal Audit Service

The Internal Audit Service provides independent advice, opinions and
recommendations on the quality and functioning of internal control systems inside the
Commission, EU agencies and other autonomous bodies.
The Internal Audit Service
carries out some 150 audits annually in the different departments of the
Commission
makes recommendations to those departments on how they can improve their
management processes (for risks, controls, governance)
promotes a culture of efficient and effective management in Commission
departments
audits European agencies and other bodies that receive funding from the EU
budget

American Center for Government Auditing (ACGA)

Established in 2014, the American Center for Government Auditing
(ACGA) is a service to government members of The IIA in the U.S.
Public sector auditors include anyone fulfilling an audit capacity and working in local,
state, or federal government, or any publicly-controlled or publicly-funded agencies,
enterprises, and other entities that deliver public programs, goods, or services.
Currently, the ACGA has more than 11,000 members who enjoy benefits including local,
regional, and national professional networking; world-class training; certification;
standards and guidance; research; and more.

3. Five Universities that provide training/ education in the IT auditing area

Ateneo de Manila University

University of Sto. Tomas
Far Eastern University
De La Salle University
University of the Philippines

4. Certifications that would be helpful for the audit staff to take

Certified Financial Analyst (CFA) Designation

The certified financial analyst designation is meant to train you and prepare you for a
career in the finance and investment world. It helps train people to think analytically
about finance, investing, and how businesses operate. This makes CFAs great
controllers and CFOs.This is a good certification for you if you are looking to get into the
world of finance and investing. If you want to do tax preparation or auditing, this isnt the
certification for you. Youd be better off with a CPA.

Certified Management Accountant (CMA) Certification

The certified management accountant designation specializes in company accounting

management. This is a topic that the CPA exam doesnt really even cover. Thus, it
makes these candidates great for internal management and executive level roles in
companies. For example, a CMA makes a great COO or CFO.
This certification is not that great for public accounting, however. It doesnt train or
certify you to perform audit procedures, write reports, or do any type of tax work. Its
strictly focused on management. Thus, if you wanted to become an executive level
officer in a Fortune 500 company, this would be a good certification to get.
.

Certified Internal Auditor (CIA) Certification

The certified internal auditor designation is strictly for compliance officers and auditors.
CIAs typically work for large companies performing audit procedures and helping
independent auditors do their jobs.

Certified Information Systems Auditor

CISAs ensure an organizations IT/business systems are properly checked, controlled
and protected. This role combines some accounting, auditing and computer scientist
skills. CISAs use an auditors knowledge in the world of IT, assess vulnerabilities, while
instituting technology controls in an enterprise environment.

Professional Organizations and their Perks

Certified Government Financial Manager (CGFM)

Over 13,000 individuals have received the CGFM designation, the first certification
broad enough to cover the whole field of government financial management - federal,
state and local. It deals not with testing a person in a specific area, but with measuring a
wide range of knowledge and skills that a professional needs to succeed in the federal
government financial environment, or to meet the unique challenges faced by state and
local government financial managers.

Certified Management Accountants (CMA) Philippines is the largest management

accounting organization in the Philippines that promotes professionalism and science of
management accounting practice.
Professional development in the Association includes the general membership
meetings, fora and seminars, and the annual convention. The general membership
meetings deal with relevant and current issues discussed by leading speakers in the
private and public sectors. They provide the venue for the exchange of ideas and
experiences. Fora and seminars are also another form of interaction where issues are
discussed and analyzed. Likewise, the annual conventions serve as a venue for the
exchange of ideas. Experts in specific areas of interest are invited to speak at these
conferences. The publication of PAMA Currents, the official letter of the Association, is
a part of the Associations efforts to help its members enhance their skills.

ACPAPP - Association of CPAs in Public Practice

ACPAPP, as an organization, aims to consolidate the ranks of all CPAs in Public
Practice, enhance their professional competencies and to strictly adhere
to the Professions Code of Ethics.
To realize this vision, ACPAPP shall strengthen its linkages with all regulatory agencies
of the government, strengthen its advocacy role and come out with activities
that will solidly unite its members and develop their technical and professional
competencies.
It is ACPAPPs vision to see all Filipino CPAs in Public Practice elevated to a group of
highly esteemed professionals, competently and excellently performing their assigned
tasks in the world of business and governance.

ACPACI - Association of CPAs in Commerce and Industry

ACPAE - Association of CPAs in Education
GACPA - Government Association of CPAs