Rangkuman Materi

Business English

Group 1 :
Hidayah
Ikhlima S
Lalu M
Lilis M
Gene
Taufik B Aji
Yulita L
Scopes Of Auditing
Scope of audit is an aspect that must be concern when we are going to audit the financial
reports. It is a limitation that must be obey properly by the auditor during audit the data. The
purpose of the scope of the audit is to establish the extent of the examination that is the
responsibility of the auditor and focus on the part that is considered important in the
implementation of the audit. The scope of audit also contains:

- The auditor’s work; by giving the opinions including the limitation of answering the
questions, whether the financial statements are made in all material respects in accordance
with the applicable financial reporting.
- Any expansion of the prior audit responsibilities, as may be set out in statutory provisions,
obliges theauditor to carry out additional work and modify or expand the auditor's report in -
accordance with the expansion of his responsibilities.
- Adequate examination and evaluation as well as the effectiveness of the organization's
internal control system and the quality of performance in carrying out the responsibilities
imposed

Objectives Of Audit
Objectives of audit is make record of financial statements of company as a report to prove the
true and fairness of company’s financial. It has purpose to avoid fauds and error and prevent
all existing risks. Objectives of audit are broadly classified into :

a) primary objective
b) secondary objective.

Primary objective of audit is make a report including:

1. The accurancy of the financial statement of company. It must be prepared by the

accountant of company (owner).
2. Examining the true and fairness of operating result of balance sheet presented profit
and loss of company every year.

Secondary objective is to detect and prevent errors which related to incideltal objective, such
as:
 1. Detection and prevention of frauds : fraud refers to intentional misrepresentation of
financial information with the intention to deceive. Frauds can take place in the form
of manipulation of accounts, misappropriation of cash( sallaries, petty cash) and
misappropriation of goods. It is of great importance for the auditor to detect any
frauds, and prevent their recurrence. Therefore, the auditor able to prove mistakes in
company management even in top-level management.
2. Detection and prevention of Errors: errors refer to carelessness of company’s
procedure to manage the financial. One of the mistake is the financial information
mistake which arises on account of ignorance of accounting principles, such as
incorrect account or error arising out of negligence of accounting staff , reckless of
staff that will ruin the company’s bookeeping system.

DETECTION OF FRAUD AND ERROR

The term fraud means the act of committing an intentional misconduct with the aim of
fooling another person for personal advantage.

FRAUD COVERS THE FOLLOWING

The Auditor fraud can be categorized as defalcation and manipulation of accounts where both
of these have the same purpose, that is to misappropriation of cash and of goods, and is
usually done by making over statements or understatement of profit on cash or goods.

FRAUD THROUGH DEFALCATION.

Defalcation fraud is an act of embezzling cash or company goods or other parties who
commit their cash or goods to someone. This fraud can be carried out by abusing or
destroying receipts for cash or goods, manipulating the quantity received, failing to make
notes on receipts, abusing cash received by adopting the lapping process method, hiding total
discounts and creditor allowances, and making fictitious purchases.

FRAUD THROUGH MANIPULATION OF ACCOUNTS

Account manipulation fraud is also known as window dressing because accounts are
manipulated to show a false picture of the profits or losses of the business and its financial
state. This fraud is often perpetrated at the top management level by manipulating earnings
reports and belittling them, and it is difficult to detect them
TYPES OF SUSPECT FRAUD AGAINST THE AUDITOR

Auditors can be defendants in fraud cases, including in conditions where invoices, checks, or
contracts are lost, control accounts do not match the subsidiary ledger, there are differences in
the trial balance or differences between balances and balance confirmations, there are
differences in stock according to records and physical stock, etc.

PROCEDURE TO BE FOLLOWED TO DETECT ERRORS.

There are procedures that can be carried out by the auditor in detecting errors, that is by
checking the balance from the previous year's balance sheet, checking the posting of general
ledger accounts and the number of subsidiary ledgers and making sure they are calculated
correctly, verifying all castings and carry, and doing balance comparisons from previous
years. Ultimately careful scrutiny is the only remedy for detection of errors.

THE AUDITOR DUTIES AGAINST FRAUD

Auditors must perform several tasks in dealing with possible fraud cases, by examining all
financial aspects such as salary and payroll, verifying stock valuation methods, checking
stock lists, as well as guaranteeing all receipts from counterfoils and when there is suspicion,
investigate in detail.

Principle Of Auditing

The audit aims to see that the report from the account contains no errors or fraud that aims to
distort what is conveyed by the account. For this reason, an emphasis is needed on
arithmetical accuracy which is still in use today, the emphasis is on compiling reports so that
the problems contained in the accounting can be seen accurately. It can be concluded that the
audit can be used to spot false records and serious errors contained in the books, but the main
purpose of an audit is not to detect false or fraudulent records, but to form an accurate
report.Therefore with the audit, deceit and miscue accounting book statements can true
detected and equitable. So that future will do not misstep again. Principles of audits is to
review about financial route in account.