Accounting Information in OrganizationCHAPTER ONE1.1 INTRODUCTION AND BACKGROUND OF THE PROBLEMAccounting Information at an organization is used by a number of users both internally and Externally. Management of organizations is responsible for preparation of the accounting Information, through the accounting department and internal audit unit for assurance of their reliability and integrity of accounting information. Users of accounting information consist of managers, creditors, suppliers, Government Institutions, TRA and many others. These users have different needs for the Information. Decisions are made by these users basing on information produced. The decisions made have a lot of economic impact to the users. Thus integrity and reliability of accounting information is an important issue for these users. In practical situation, there are users of accounting information such as manager and investors have been the victims of unreliable information which cause a loss to them, although the organizations which produce those information have internal audit units. These circumstances lead to a need for understanding the role and scope of internal audit firm in preparation and presentation of accounting information. The study needs to show also some challenges if present faced by internal audit unit within an organization. On the other side, there are external auditors who mostly rely on the work of internal auditor in fulfilling their statutory duties of forming an opinion of the truth and fairness of financial Statements.
Internal audit unit also have to play a role to ensure reliance placed by external audit is worth of it. Because if external audit rely on internal auditors who are not effective will have adverse effects on the users of accounting information. Thus external audit must ensure that the auditor’s consideration of the internal audit function is adhered to (ISA 610). Thus, the purpose of this study is to assess the contribution by the internal audit unit in providing assurance on the reliability and integrity of accounting information and the impact it has on the economic decision made by management and external users.
1.2 STATEMENT OF THE PROBLEMAccounting information are tools used by management and other external users in making their economic decisions. The information produced is expected to be free of material misstatements so that it may not affect the decisions made by users of those information. Internal audit unit in organizations are assigned many role and duties of financial and non-financial in nature. They are also involved in ensuring reliability and integrity of accounting information. But the events where users are affected by materially misstated accounting information raised a question on the effectiveness of internal audit in achieving integrity and reliability of accounting information. The aim of the research
is to answer such question. One of the primary questions is, What is the value of external auditors in achieving value for money. It is asked, if not for external auditors, what is the value for money, given the absence of a single auditor for over 30 years, and does external audit work give an understanding on this? This question is also asked in the second section of the paper. In addition it is asked about the use of external audit in developing financial planning, and its consequences for the functioning of the organization. It is also asked how the management uses external analysis for the evaluation of financial planning processes.
2.5 The Organization Can Use External Reports In its audit reports of the financial crisis it also notes the significance of external auditing of various government departments, including the Reserve Bank of India, the Central Bank and the Finance Ministry. An interesting question, this time in relation to the performance on the financial statements of the two top financial institutions, is asked here, If the management had the data collection capability, what would the management expect to gain from the information, e.g. with regard to financial statements? The answer can be no when considering the financial reports to the finance ministry, but in the event of any difficulties such as problems of data collection and retrieval which must be solved by external audit, then the management should use external reports in this respect. In other words, a government department may be using this type of external system to provide its financial statements. One aspect of the approach envisaged here, in the context of the study, might include the management of the government department’s financial report collection, and even the management of its report on the financial statements of the Finance Ministry. Thus we may also see a potential for internal auditing through external reports, but this is not the intention of the paper.
2.6 The Organization Can Use External Reports In order to create an internal value judgment for the financial statements it states, the information of external audit can be released (in accordance with the audit report) to an external audit organisation. We now have information from our external audit group which is supposed to be internal auditors who can examine external reports of the financial situation and understand the role of some internal audit bodies. The information obtained by outside auditors can be released to an external auditors who are expected to carry out internal audits. If so, this information can be analysed in the context of the financial reports of each financial branch. The results of the external audits will be of interest, since such information is considered in the context of the information obtained from external examination. Nevertheless, the management of their reports can decide, on what basis should the disclosure of the financial information as written be made public? In accordance with the financial statements of the various branches, this answer is not given until the information is reviewed by external auditors in the context of the various financial reports.
There are other options to increase transparency and reduce transparency. What would
is to answer such question. One of the primary questions is, What is the value of external auditors in achieving value for money. It is asked, if not for external auditors, what is the value for money, given the absence of a single auditor for over 30 years, and does external audit work give an understanding on this? This question is also asked in the second section of the paper. In addition it is asked about the use of external audit in developing financial planning, and its consequences for the functioning of the organization. It is also asked how the management uses external analysis for the evaluation of financial planning processes.
2.5 The Organization Can Use External Reports In its audit reports of the financial crisis it also notes the significance of external auditing of various government departments, including the Reserve Bank of India, the Central Bank and the Finance Ministry. An interesting question, this time in relation to the performance on the financial statements of the two top financial institutions, is asked here, If the management had the data collection capability, what would the management expect to gain from the information, e.g. with regard to financial statements? The answer can be no when considering the financial reports to the finance ministry, but in the event of any difficulties such as problems of data collection and retrieval which must be solved by external audit, then the management should use external reports in this respect. In other words, a government department may be using this type of external system to provide its financial statements. One aspect of the approach envisaged here, in the context of the study, might include the management of the government department’s financial report collection, and even the management of its report on the financial statements of the Finance Ministry. Thus we may also see a potential for internal auditing through external reports, but this is not the intention of the paper.
2.6 The Organization Can Use External Reports In order to create an internal value judgment for the financial statements it states, the information of external audit can be released (in accordance with the audit report) to an external audit organisation. We now have information from our external audit group which is supposed to be internal auditors who can examine external reports of the financial situation and understand the role of some internal audit bodies. The information obtained by outside auditors can be released to an external auditors who are expected to carry out internal audits. If so, this information can be analysed in the context of the financial reports of each financial branch. The results of the external audits will be of interest, since such information is considered in the context of the information obtained from external examination. Nevertheless, the management of their reports can decide, on what basis should the disclosure of the financial information as written be made public? In accordance with the financial statements of the various branches, this answer is not given until the information is reviewed by external auditors in the context of the various financial reports.
There are other options to increase transparency and reduce transparency. What would