‫وزارة التعليم العالي والبحث العلمي‬

‫جامعة زيان عاشور‬

‫كلية العلوم االقتصادية والتسيير علوم تجارية‬

‫‪Department of finance and accounting‬‬

‫‪G : 04‬‬

‫‪Auditing‬‬
‫‪Student Names :‬‬
‫‪Guioua Siradj‬‬
‫‪Haboul Attia‬‬

‫‪2019/2020‬‬
financial audit :
is conducted to provide an opinion whether "financial
statements" (the information being verified) are stated in
accordance with specified criteria. Normally, the criteria are
international accounting standards, although auditors may
conduct audits of financial statements prepared using the cash
basis or some other basis of accounting appropriate for the
organisation. In providing an opinion whether financial
statements are fairly stated in accordance with accounting
standards, the auditor gathers evidence to determine whether
the statements contain material errors or other misstatements.

History :
The earliest surviving mention of a public official charged with
auditing government expenditure is a reference to the Auditor
of the Exchequer in England in 1314. The Auditors of the
Imprest were established under Queen Elizabeth I in 1559 with
formal responsibility for auditing Exchequer payments. This
system gradually lapsed and in 1780, Commissioners for
Auditing the Public Accounts were appointed by statute. From
1834, the Commissioners worked in tandem with
the Comptroller of the Exchequer, who was charged with
controlling the issuance of funds to the government.

As Chancellor of the Exchequer, William Ewart

Gladstone initiated major reforms of public finance and
Parliamentary accountability. His 1866 Exchequer and Audit
Departments Act required all departments, for the first time, to
produce annual accounts, known as appropriation accounts. The
Act also established the position of Comptroller and Auditor
General (C&AG) and an Exchequer and Audit Department
(E&AD) to provide supporting staff from within the civil service.
The C&AG was given two main functions – to authorise the
issue of public money to government from the Bank of England,
having satisfied himself that this was within the limits Parliament
had voted – and to audit the accounts of all Government
departments and report to Parliament accordingly.

Auditing of UK government expenditure is now carried out by

the National Audit Office. The Australian National Audit
Office conducts all financial statement audits for entities
controlled by the Australian Government.

Responsibilities of an auditor :
Corporations Act 2001 requires the auditor to:

 Gives a true and fair view about whether the financial

report complies with the accounting standards

 Conduct their audit in accordance with auditing standards

 Give the directors and auditor's independence declaration

and meet independence requirements

 Report certain suspected contraventions to ASIC

Commercial relationships versus
objectivity :
One of the major issues faced by private auditing firms is the
need to provide independent auditing services while
maintaining a business relationship with the audited company.

The auditing firm's responsibility to check and confirm the

reliability of financial statements may be limited by pressure
from the audited company, who pays the auditing firm for the
service. The auditing firm's need to maintain a viable business
through auditing revenue may be weighed against its duty to
examine and verify the accuracy, relevancy, and completeness of
the company's financial statements. This is done by auditor.

Numerous proposals are made to revise the current system to

provide better economic incentives to auditors to perform the
auditing function without having their commercial interests
compromised by client relationships. Examples are more direct
incentive compensation awards and financial statement
insurance approaches. See, respectively, Incentive Systems to
Promote Capital Market Gatekeeper Effectiveness and Financial
Statement Insurance.
Auditors and technology :
Currently, many entities being audited are using information
systems, which generate information electronically. For the audit
evidences, auditors get dynamic information generated from
the information systems in real time. There are less paper
documents and pre-numbered audit evidences available, which
leads a revolution to audit mythology.