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1. Introduction to audit and corporate governance

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Spot the auditor

Group exercise

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An audit involves….

Investigating information prepared by someone else to decide whether it is fairly stated

Group exercise

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An audit involves….

Reporting back on your results

Group exercise

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Four key concepts

Planning Risk assessment Evidence Materiality

Group exercise

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What is audit?

Narrow External Audit

Wider Internal Audit

Widest Anything that uses the work audit e.g. a ‘Health and Safety Audit’

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External versus internal audit

External Audit Internal Audit

Requirement Usually yes e.g. Companies Act

Usually no

Objectives ‘True and fair view’ & sometimes more

Assurance on systems & controls

Independence Never an employee

Can be employees

Reporting Shareholders/ public

Management

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External audit: private vs public

Private sector Public sector

Requirement Yes – Companies Act

Yes – different bits of legislation

Objectives ‘True and fair view’ & sometimes more

‘True and fair view’ & value for money

Independence Firm – appointed by shareholders

Agency or firm – usually not appointed by body

Reporting Shareholders Body/Parliament/ Public

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Some key qualities of auditors …

o Independenceo Integrityo Objectivityo Professional scepticism

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Benefits of audit

Funders Management

Accountability

Funding