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Audit Report Notes

The document provides information about audit reports and corporate governance. It defines key terms related to internal and external audits such as audit opinions and evidence. It also defines roles in corporate governance like directors, boards of directors, executive directors and non-executive directors. The document is intended as a study guide for accounting students.

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24 views1 page

Audit Report Notes

The document provides information about audit reports and corporate governance. It defines key terms related to internal and external audits such as audit opinions and evidence. It also defines roles in corporate governance like directors, boards of directors, executive directors and non-executive directors. The document is intended as a study guide for accounting students.

Uploaded by

nhlahlablessing
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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2022 Gr 12 Accounting Study Pack Activities/Notes

AUDIT REPORTS
(More details are available in the 2020 Revision Pack)

Basic concepts
Internal auditor | external (independent) auditor | audit opinion | unqualified opinion | qualified opinion
disclaimer of opinion | audit sampling | audit evidence | internal audit report | external audit report

External audit reports are included in the published Financial Statements of companies.
Shareholders, employees and creditors need to TRUST and BELIEF the financial statements prepared by the
internal auditors and approved by directors. th the company relies on these financial
statements.
External auditors issue an OPINION on the published financial statements based on their external audit after
checking the reliability of the sampled audit evidence, e.g. internal controls that are in place, etc.
THREE types of external audit opinions based on the auditors :
o Unqualified clean shareholders may believe the
financial results reflected in the published financial statements.
o Qualified = some issues were found that can make statements less credible. Directors will have an
opportunity to explain or make changes to the statements.
o Disclaimer of opinion = Auditors are not willing to issue any opinion as the financial information are too
flawed and does not meet IFRS standards auditing rules
Auditors should be registered with a professional institution (SAICA, SAIPA, ACCA, SAIBA, etc.) for the
following reasons:
o Professionally recognition to work (practice) as an independent auditor
o Their qualifications are verified
o Act/Work within a professional code of conduct to be ethical and trustworthy

CORPORATE GOVERNANCE
Basic concepts
Shareholders | directors | board of directors | executive directors | non-executive directors | management
committees | transparent & ethical management | management | control | CEO | CFO

In Gr 12 corporate governance entails:


effective, responsible and ethical management of a company.
a broader /deeper insight into managing and control in a company.

DIRECTORS (on behalf of shareholders, the owners of the company) are responsible for managing
companies.
Directors may hold shares in the company (this depends on the MOA of the company)
Directors are members of the BOARD of DIRECTORS who are collectively in charge of the management of a

They make strategic (long term) and operational (short term) decision [see the Cash Flow Statement for some
of the strategic decisions]
Some management duties are given (delegated) to either individual directors or management committees.

Types of directors
Executive directors: employed by the company; manage the day-to-day operations
Non-
board of directors
CEO (Chief Executive Officer): chairperson (leader) of the board of directors

reports directly to the CEO.

Management and/or Work committees


These committees ensure accountability and transparency in managing and operate the company.
They manage/address certain challenges relevant to the company, such as environmental awareness,
corruption and/or fraud, job creation, etc.
Examples:
o Audit committee; remunerations committee; social & ethics committee; risk committee

11

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