Financial Accounting N6 www.futuremanagers.com
Description: Financial Accounting N6 www.futuremanagers.com INTRODUCTION The Conceptual Framework for Financial Reporting forms the foundation or basis of all International Financial Reporting Standards. The purpose of the conceptual framework is to set
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slide1. Financial Accounting
N6<br>
slide2. www.futuremanagers.com INTRODUCTION
The Conceptual Framework for Financial Reporting forms the foundation or basis of all International Financial Reporting Standards. The purpose of the conceptual framework is to set out the various concepts underlying financial reporting in order to assist the International Accounting Standards Board to develop and evaluate new forms of IFRSs. Module 1: Conceptual framework<br>
slide3. www.futuremanagers.com Module 1: Conceptual framework (continued) QUALITATIVE CHARACTERISTICS
In order for a set of financial statements to be useful to its users, it must have certain qualitative characteristics. These include: Relevance;
Faithful representation;
Comparability;
Verifiability;
Timeliness; and
Understandability.<br>
slide4. www.futuremanagers.com Module 1: Conceptual framework (continued) UNDERLYING ASSUMPTIONS
It is very important that users may assume that the financial statements relate to a going concern that plans to continue operating for the foreseeable future. A going concern means that the entity’s assets exceed its liabilities.<br>
slide5. www.futuremanagers.com Module 1: Conceptual framework (continued) ELEMENTS OF FINANCIAL STATEMENTS
There are five elements that make up the entire double-entry accounting system:
Assets;
Liabilities;
Equity;
Income; and
Expenses.<br>
slide6. www.futuremanagers.com Module 1: Conceptual framework (continued) RECOGNITION CRITERIA
A transaction can only be recorded (journalised in the ledger) if it meets the definition of an element first and secondly meets the recognition criteria.
The recognition criteria are:
The flow of future economic benefits caused by this element must be probable, and
The element must have a cost/value that can be reliably measured.<br>
slide7. www.futuremanagers.com INTRODUCTION
VAT is taxation on the rendering of goods or services which is borne by the consumer in the final stage of supply, but which is collected during each stage of production and marketing.
The rate at which VAT is levied is determined by legislation. Module 2: Value-added tax<br>
slide8. www.futuremanagers.com Module 2: Value-added tax (continued) THE WORKING OF VAT
During each stage of the production and services process the supplier’s profit is determined and taxed. This is attained by the supplier paying VAT on every input, which he uses to supply goods and services to his clients. The VAT paid by the supplier is his input tax. The supplier charges VAT on goods and services supplied to his clients. The VAT charged by the supplier is his output tax.<br>
slide9. www.futuremanagers.com Module 2: Value-added tax (continued) THE BASIS OF VAT
VAT is levied on:
The supply of goods or services delivered by the dealer, on or after the inception date, during the normal course of business;
The importing of goods to the RSA by any person on or after the inception date; and
The supply of imported goods by any person or after the inception date.<br>
slide10. www.futuremanagers.com Module 2: Value-added tax (continued) CALCULATION OF VAT
There are two methods of calculating VAT:
Invoice basis: VAT is payable or recoverable when an tax invoice is issued, or upon receipt thereof, regardless of whether payment has been made or received; and
Payment basis: VAT is only payable or recoverable once payment has been made or received. Special permission is needed to pay according the payment basis.<br>
slide11. www.futuremanagers.com Module 2: Value-added tax (continued) THE SALE OF GOODS
Businesses that are registered VAT vendors in terms of tax legislation must charge VAT on the sale of all the goods and services supplied by them. The marked price of all these goods and services must be shown inclusive of VAT.<br>
slide12. www.futuremanagers.com Module 2: Value-added tax (continued) THE PURCHASE OF GOODS
When a business, that is a VAT vendor, buys goods or services from a VAT vendor, the business can claim the VAT they paid on these goods or services from SARS. If the business from which you buy goods or services, is not a VAT vendor, no VAT can be claimed from SARS.<br>
slide13. www.futuremanagers.com Module 2: Value-added tax (continued) COMPLETION OF VAT RETURNS
The VAT return is called VAT201. On this form the VAT vendor must declare the Output VAT and Input VAT for that specific period. The difference between the two is payable to or receivable from SARS.<br>
slide14. www.futuremanagers.com DIFFERENT TYPES OF COMPANIES
Companies are divided into categories:
State-owed companies;
Private companies;
Personal liability companies;
Public companies; and
Non-profit companies. Module 3: Companies<br>
slide15. www.futuremanagers.com Module 3: Companies (continued) THE ESTABLISHMENT OF A COMPANY
Registration;
Legal entity;
Name reservation;
Memorandum of Incorporation;
Registered office;
Commencing with a company;
Public interest score.<br>
slide16. www.futuremanagers.com Module 3: Companies (continued) CAPITAL OF A COMPANY
There are different forms of company capital:
Authorised share capital;
Issued share capital; and
Un-issued or reserve share capital.<br>
slide17. www.futuremanagers.com Module 3: Companies (continued) TAXATION
The company is a taxpayer separate from its shareholders. The company income tax is calculated on the taxable income according to the requirements of the Income Tax Act. The income tax rate paid by a company is set at a fixed percentage, and not on a sliding scale as in the case with individuals and trusts.<br>
slide18. www.futuremanagers.com Module 3: Companies (continued) FINANCIAL STATEMENTS ACCORDING TO THE REQUIREMENTS OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS
The annual financial statements should be drawn up according to the financial reporting standards as stated below and should be a fair representation of the following:
The state of the company’s affairs and its business at the end of the financial period concerned; and
The profit or loss of the company for the financial period concerned.<br>
slide19. www.futuremanagers.com CHARACTERISTICS OF CLOSE CORPORATION AS AN ENTERPRISE
One to ten natural persons can form a Close Corporation.
A Close Corporation is a legal entity which is independent of its members.
The name must end in CC.
CC has no share capital or shareholders. Owners are called ‘members’.
Each member holds a ‘members interest’ expressed as a percentage.
All members may take part in the management of the CC. Module 4: Close Corporation (CC)<br>
slide20. www.futuremanagers.com ADVANTAGES OF CLOSE CORPORATION AS AN ENTERPRISE
The cost of the formation of a CC is lower than for a company.
No compulsory meeting.
All members may take part in the management of the business.
Can hold shares in companies and may even have controlling powers in the company.
The liability of the members is limited, except in certain circumstances. Module 4: Close Corporation (CC)<br>
slide21. www.futuremanagers.com DISADVANTAGES OF CLOSE CORPORATION AS AN ENTERPRISE
An action by a member as an agent of the CC with a third party, will be binding on the CC.
A CC is no longer exempt from being audited but will not be subject to an audit on the same terms and conditions as companies.
Members must agree before a member can withdraw his interest.
Expansion is hampered due to the limited number of members. Module 4: Close Corporation (CC)<br>
slide22. www.futuremanagers.com Module 4: Close Corporation (CC) (continued) MEMBERS’ CONTRIBUTION
Every member of a CC must make a contribution to the business.
Members’ contributions can be in the following formats: cash, assets or services and can be increased or decreased.
• The changes in the members’ contributions must be recorded in an amended founding statement.
The CC is a legal person - the law regards the business as if it were a person. Therefore the business owns assets and is responsible for debts.<br>
slide23. www.futuremanagers.com Module 4: Close Corporation (CC) (continued) MEMBERS’ INTEREST
The interest of each member refers to the percentage ownership that each member has in the close corporation. The contributions by members need not be in the same proportion as the members’ percentage interest. It is the members’ interests, and not their contributions, which determine the proportion in which profits and losses are to be shared.<br>
slide24. www.futuremanagers.com Module 4: Close Corporation (CC) (continued) FINANCIAL STATEMENTS
The financial statements of a close corporation consist of:
A balance sheet,
An income statement.
Notes which comprise a summary of accounting policies.
Statement of changes in equity.
Cash flow statement.<br>
slide25. www.futuremanagers.com Module 4: Close Corporation (CC) (continued) DISCLOSURE ITEMS
Annual financial statements must disclose separately the following items:
Contributions by members;
Retained income (undrawn profits);
Revaluation of non-current assets;
Amount of loans to members; and
Amount of loans from members.<br>
slide26. www.futuremanagers.com INTRODUCTION
The statement of cash flow may be the most important statement which is drafted by any business. This statement traces the flow of funds (cash, money or working capital) into and out of the business during an accounting period. Module 5: Statement of cash flow<br>
slide27. www.futuremanagers.com Module 5: Statement of cash flow (continued) OBJECTIVES OF A STATEMENT OF CASH FLOW
The primary purpose (objectives) of the statement of cash flow is to provide management with information regarding the cash receipts and cash payments in a business for a specified period of time.<br>
slide28. www.futuremanagers.com Module 5: Statement of cash flow (continued) USERS OF THE STATEMENT OF CASH FLOW
This includes:
Entrepreneurs/owners;
Credit granters; and
Those who handle cash flow management.<br>
slide29. www.futuremanagers.com Module 5: Statement of cash flow (continued) DESCRIPTIONS AND CONCEPTS OF THE STATEMENT OF CASH FLOW
Cash is generally any currency a business owns.
Cash equivalents are assets that can be converted into cash within a short time but are subject to an insignificant risk of changes.
Cash flows are the flow of funds in and out of a business.
Investment activities are the acquisition and disposal of long-term assets and other investments which are not included in cash and cash equivalents.<br>
slide30. www.futuremanagers.com Module 5: Statement of cash flow (continued) ADVANTAGES OF THE STATEMENT OF CASH FLOW
It provides adequate information as regards the inflows and outflows of cash resources to and from the business.
It evaluates the level of efficiency of the management of the business as regards the uses of its cash resources.
It discloses the liquidity and solvency position of the business.
It helps management a lot for future cash planning of the business.<br>
slide31. www.futuremanagers.com Module 5: Statement of cash flow (continued) DISADVANTAGES OF THE STATEMENT OF CASH FLOW
It shows only the cash position, it is therefore not possible to arrive at the actual profit and loss of the business by just looking at this statement.
It does not take into consideration any future growth.
The information on a cash flow statement is not necessarily easy to interpret. You can see where all of the cash is going, but you may not know if it should be going there.<br>
slide32. www.futuremanagers.com Module 5: Statement of cash flow (continued) NON-CASH FLOW ITEMS
Non-cash flow items are entries which do not represent a flow of cash, but are recorded in the accounting records of the business. These entries are normally book entries or journals passed by the management of the business and they do not represent any transactions with a third party.<br>
slide33. www.futuremanagers.com Module 5: Statement of cash flow (continued) THE TWO METHODS OF PRESENTATION OF CASH FLOW AND THE NOTES TO THE CASH FLOW
The international accounting standard covering the statement of cash flow, allows for two methods to be used to present a statement of cash flow:
The direct method; and
The indirect method.<br>
slide34. www.futuremanagers.com Module 5: Statement of cash flow (continued) PROCEDURES TO BE FOLLOWED WHEN COMPILING A STATEMENT OF CASH FLOW
Do the ledger accounts of assets that are disposed of.
Calculate the amount for ‘Cash receipts from customers’ .
Calculate the amount for ‘Cash payments to suppliers and employees’.
Calculate the actual cash amounts paid to shareholders
Prepare the two notes to the statement of cash flow.
Prepare the face of the statement of cash flow.<br>
slide35. www.futuremanagers.com Module 5: Statement of cash flow (continued) SPECIAL ITEMS
Depreciation written off at the end of the financial year is a non-cash item which does not represent a flow of cash and it is included in the income statement as an operating expense.
The income statement only shows the profit or loss made on the sale or scrapping of the asset and does not indicate the total cash received when the asset was sold.<br>
slide36. www.futuremanagers.com INTERNAL AUDITING
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Module 6: Auditing<br>
slide37. www.futuremanagers.com Module 6: Auditing (continued) EXTERNAL AUDITING
External Auditing is an independent, objective process of obtaining and evaluating evidence and expressing an opinion on whether the annual financial statements of a company fairly present the actual financial position of the company and assist in any other financial service a company may require.<br>
slide38. www.futuremanagers.com Module 6: Auditing (continued) DIFFERENCE BETWEEN INTERNAL AND EXTERNAL AUDITING<br>
slide39. www.futuremanagers.com Module 6: Auditing (continued) AUDITING EVIDENCE
Audit evidence is obtained by performing:
Risk assessment procedures;
Compliance procedures or test of controls; and
Substantive procedures.<br>
slide40. www.futuremanagers.com Module 6: Auditing (continued) AUDITING REPORTS
In auditing, there can be an internal report and an external report. The objective of the internal audit report is to provide a written record of the findings during the internal audit and to make recommendations on how to resolve problem situations.<br>
N6<br>
slide2. www.futuremanagers.com INTRODUCTION
The Conceptual Framework for Financial Reporting forms the foundation or basis of all International Financial Reporting Standards. The purpose of the conceptual framework is to set out the various concepts underlying financial reporting in order to assist the International Accounting Standards Board to develop and evaluate new forms of IFRSs. Module 1: Conceptual framework<br>
slide3. www.futuremanagers.com Module 1: Conceptual framework (continued) QUALITATIVE CHARACTERISTICS
In order for a set of financial statements to be useful to its users, it must have certain qualitative characteristics. These include: Relevance;
Faithful representation;
Comparability;
Verifiability;
Timeliness; and
Understandability.<br>
slide4. www.futuremanagers.com Module 1: Conceptual framework (continued) UNDERLYING ASSUMPTIONS
It is very important that users may assume that the financial statements relate to a going concern that plans to continue operating for the foreseeable future. A going concern means that the entity’s assets exceed its liabilities.<br>
slide5. www.futuremanagers.com Module 1: Conceptual framework (continued) ELEMENTS OF FINANCIAL STATEMENTS
There are five elements that make up the entire double-entry accounting system:
Assets;
Liabilities;
Equity;
Income; and
Expenses.<br>
slide6. www.futuremanagers.com Module 1: Conceptual framework (continued) RECOGNITION CRITERIA
A transaction can only be recorded (journalised in the ledger) if it meets the definition of an element first and secondly meets the recognition criteria.
The recognition criteria are:
The flow of future economic benefits caused by this element must be probable, and
The element must have a cost/value that can be reliably measured.<br>
slide7. www.futuremanagers.com INTRODUCTION
VAT is taxation on the rendering of goods or services which is borne by the consumer in the final stage of supply, but which is collected during each stage of production and marketing.
The rate at which VAT is levied is determined by legislation. Module 2: Value-added tax<br>
slide8. www.futuremanagers.com Module 2: Value-added tax (continued) THE WORKING OF VAT
During each stage of the production and services process the supplier’s profit is determined and taxed. This is attained by the supplier paying VAT on every input, which he uses to supply goods and services to his clients. The VAT paid by the supplier is his input tax. The supplier charges VAT on goods and services supplied to his clients. The VAT charged by the supplier is his output tax.<br>
slide9. www.futuremanagers.com Module 2: Value-added tax (continued) THE BASIS OF VAT
VAT is levied on:
The supply of goods or services delivered by the dealer, on or after the inception date, during the normal course of business;
The importing of goods to the RSA by any person on or after the inception date; and
The supply of imported goods by any person or after the inception date.<br>
slide10. www.futuremanagers.com Module 2: Value-added tax (continued) CALCULATION OF VAT
There are two methods of calculating VAT:
Invoice basis: VAT is payable or recoverable when an tax invoice is issued, or upon receipt thereof, regardless of whether payment has been made or received; and
Payment basis: VAT is only payable or recoverable once payment has been made or received. Special permission is needed to pay according the payment basis.<br>
slide11. www.futuremanagers.com Module 2: Value-added tax (continued) THE SALE OF GOODS
Businesses that are registered VAT vendors in terms of tax legislation must charge VAT on the sale of all the goods and services supplied by them. The marked price of all these goods and services must be shown inclusive of VAT.<br>
slide12. www.futuremanagers.com Module 2: Value-added tax (continued) THE PURCHASE OF GOODS
When a business, that is a VAT vendor, buys goods or services from a VAT vendor, the business can claim the VAT they paid on these goods or services from SARS. If the business from which you buy goods or services, is not a VAT vendor, no VAT can be claimed from SARS.<br>
slide13. www.futuremanagers.com Module 2: Value-added tax (continued) COMPLETION OF VAT RETURNS
The VAT return is called VAT201. On this form the VAT vendor must declare the Output VAT and Input VAT for that specific period. The difference between the two is payable to or receivable from SARS.<br>
slide14. www.futuremanagers.com DIFFERENT TYPES OF COMPANIES
Companies are divided into categories:
State-owed companies;
Private companies;
Personal liability companies;
Public companies; and
Non-profit companies. Module 3: Companies<br>
slide15. www.futuremanagers.com Module 3: Companies (continued) THE ESTABLISHMENT OF A COMPANY
Registration;
Legal entity;
Name reservation;
Memorandum of Incorporation;
Registered office;
Commencing with a company;
Public interest score.<br>
slide16. www.futuremanagers.com Module 3: Companies (continued) CAPITAL OF A COMPANY
There are different forms of company capital:
Authorised share capital;
Issued share capital; and
Un-issued or reserve share capital.<br>
slide17. www.futuremanagers.com Module 3: Companies (continued) TAXATION
The company is a taxpayer separate from its shareholders. The company income tax is calculated on the taxable income according to the requirements of the Income Tax Act. The income tax rate paid by a company is set at a fixed percentage, and not on a sliding scale as in the case with individuals and trusts.<br>
slide18. www.futuremanagers.com Module 3: Companies (continued) FINANCIAL STATEMENTS ACCORDING TO THE REQUIREMENTS OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS
The annual financial statements should be drawn up according to the financial reporting standards as stated below and should be a fair representation of the following:
The state of the company’s affairs and its business at the end of the financial period concerned; and
The profit or loss of the company for the financial period concerned.<br>
slide19. www.futuremanagers.com CHARACTERISTICS OF CLOSE CORPORATION AS AN ENTERPRISE
One to ten natural persons can form a Close Corporation.
A Close Corporation is a legal entity which is independent of its members.
The name must end in CC.
CC has no share capital or shareholders. Owners are called ‘members’.
Each member holds a ‘members interest’ expressed as a percentage.
All members may take part in the management of the CC. Module 4: Close Corporation (CC)<br>
slide20. www.futuremanagers.com ADVANTAGES OF CLOSE CORPORATION AS AN ENTERPRISE
The cost of the formation of a CC is lower than for a company.
No compulsory meeting.
All members may take part in the management of the business.
Can hold shares in companies and may even have controlling powers in the company.
The liability of the members is limited, except in certain circumstances. Module 4: Close Corporation (CC)<br>
slide21. www.futuremanagers.com DISADVANTAGES OF CLOSE CORPORATION AS AN ENTERPRISE
An action by a member as an agent of the CC with a third party, will be binding on the CC.
A CC is no longer exempt from being audited but will not be subject to an audit on the same terms and conditions as companies.
Members must agree before a member can withdraw his interest.
Expansion is hampered due to the limited number of members. Module 4: Close Corporation (CC)<br>
slide22. www.futuremanagers.com Module 4: Close Corporation (CC) (continued) MEMBERS’ CONTRIBUTION
Every member of a CC must make a contribution to the business.
Members’ contributions can be in the following formats: cash, assets or services and can be increased or decreased.
• The changes in the members’ contributions must be recorded in an amended founding statement.
The CC is a legal person - the law regards the business as if it were a person. Therefore the business owns assets and is responsible for debts.<br>
slide23. www.futuremanagers.com Module 4: Close Corporation (CC) (continued) MEMBERS’ INTEREST
The interest of each member refers to the percentage ownership that each member has in the close corporation. The contributions by members need not be in the same proportion as the members’ percentage interest. It is the members’ interests, and not their contributions, which determine the proportion in which profits and losses are to be shared.<br>
slide24. www.futuremanagers.com Module 4: Close Corporation (CC) (continued) FINANCIAL STATEMENTS
The financial statements of a close corporation consist of:
A balance sheet,
An income statement.
Notes which comprise a summary of accounting policies.
Statement of changes in equity.
Cash flow statement.<br>
slide25. www.futuremanagers.com Module 4: Close Corporation (CC) (continued) DISCLOSURE ITEMS
Annual financial statements must disclose separately the following items:
Contributions by members;
Retained income (undrawn profits);
Revaluation of non-current assets;
Amount of loans to members; and
Amount of loans from members.<br>
slide26. www.futuremanagers.com INTRODUCTION
The statement of cash flow may be the most important statement which is drafted by any business. This statement traces the flow of funds (cash, money or working capital) into and out of the business during an accounting period. Module 5: Statement of cash flow<br>
slide27. www.futuremanagers.com Module 5: Statement of cash flow (continued) OBJECTIVES OF A STATEMENT OF CASH FLOW
The primary purpose (objectives) of the statement of cash flow is to provide management with information regarding the cash receipts and cash payments in a business for a specified period of time.<br>
slide28. www.futuremanagers.com Module 5: Statement of cash flow (continued) USERS OF THE STATEMENT OF CASH FLOW
This includes:
Entrepreneurs/owners;
Credit granters; and
Those who handle cash flow management.<br>
slide29. www.futuremanagers.com Module 5: Statement of cash flow (continued) DESCRIPTIONS AND CONCEPTS OF THE STATEMENT OF CASH FLOW
Cash is generally any currency a business owns.
Cash equivalents are assets that can be converted into cash within a short time but are subject to an insignificant risk of changes.
Cash flows are the flow of funds in and out of a business.
Investment activities are the acquisition and disposal of long-term assets and other investments which are not included in cash and cash equivalents.<br>
slide30. www.futuremanagers.com Module 5: Statement of cash flow (continued) ADVANTAGES OF THE STATEMENT OF CASH FLOW
It provides adequate information as regards the inflows and outflows of cash resources to and from the business.
It evaluates the level of efficiency of the management of the business as regards the uses of its cash resources.
It discloses the liquidity and solvency position of the business.
It helps management a lot for future cash planning of the business.<br>
slide31. www.futuremanagers.com Module 5: Statement of cash flow (continued) DISADVANTAGES OF THE STATEMENT OF CASH FLOW
It shows only the cash position, it is therefore not possible to arrive at the actual profit and loss of the business by just looking at this statement.
It does not take into consideration any future growth.
The information on a cash flow statement is not necessarily easy to interpret. You can see where all of the cash is going, but you may not know if it should be going there.<br>
slide32. www.futuremanagers.com Module 5: Statement of cash flow (continued) NON-CASH FLOW ITEMS
Non-cash flow items are entries which do not represent a flow of cash, but are recorded in the accounting records of the business. These entries are normally book entries or journals passed by the management of the business and they do not represent any transactions with a third party.<br>
slide33. www.futuremanagers.com Module 5: Statement of cash flow (continued) THE TWO METHODS OF PRESENTATION OF CASH FLOW AND THE NOTES TO THE CASH FLOW
The international accounting standard covering the statement of cash flow, allows for two methods to be used to present a statement of cash flow:
The direct method; and
The indirect method.<br>
slide34. www.futuremanagers.com Module 5: Statement of cash flow (continued) PROCEDURES TO BE FOLLOWED WHEN COMPILING A STATEMENT OF CASH FLOW
Do the ledger accounts of assets that are disposed of.
Calculate the amount for ‘Cash receipts from customers’ .
Calculate the amount for ‘Cash payments to suppliers and employees’.
Calculate the actual cash amounts paid to shareholders
Prepare the two notes to the statement of cash flow.
Prepare the face of the statement of cash flow.<br>
slide35. www.futuremanagers.com Module 5: Statement of cash flow (continued) SPECIAL ITEMS
Depreciation written off at the end of the financial year is a non-cash item which does not represent a flow of cash and it is included in the income statement as an operating expense.
The income statement only shows the profit or loss made on the sale or scrapping of the asset and does not indicate the total cash received when the asset was sold.<br>
slide36. www.futuremanagers.com INTERNAL AUDITING
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Module 6: Auditing<br>
slide37. www.futuremanagers.com Module 6: Auditing (continued) EXTERNAL AUDITING
External Auditing is an independent, objective process of obtaining and evaluating evidence and expressing an opinion on whether the annual financial statements of a company fairly present the actual financial position of the company and assist in any other financial service a company may require.<br>
slide38. www.futuremanagers.com Module 6: Auditing (continued) DIFFERENCE BETWEEN INTERNAL AND EXTERNAL AUDITING<br>
slide39. www.futuremanagers.com Module 6: Auditing (continued) AUDITING EVIDENCE
Audit evidence is obtained by performing:
Risk assessment procedures;
Compliance procedures or test of controls; and
Substantive procedures.<br>
slide40. www.futuremanagers.com Module 6: Auditing (continued) AUDITING REPORTS
In auditing, there can be an internal report and an external report. The objective of the internal audit report is to provide a written record of the findings during the internal audit and to make recommendations on how to resolve problem situations.<br>