Week 2 - Assurance System Flashcards
(7 cards)
Who prepares the financial statements?
The directors with the senior management of a company
What do external auditors do?
Review the financial statements and then report to the owners/shareholders stating if they are broadly true and fair
What do the audit committee do?
Appoint the external auditors on behalf of the board of directors who are working on behalf of the shareholders (so ultimately shareholders appoint auditors, but technically comes through the board of directors and audit committee)
What do the audit committee also have the power to do?
Fire the auditors - could be legal i.e losing independence
Who are the internal auditors?
Auditors that work for the company (not same as external auditors) and are by the company but are independent - they don’t work with management or the finance director
Who do the internal auditors report to?
The audit committee
How are internal auditors related to external auditors?
The better work internal auditors do, the less external auditors have to do
