Globalization has significantly removed time and space boundaries in international business. It has also identified newer and stronger international standards by which companies are assessed and evaluated, particularly multi-national corporations. For example, hosting a website is now a necessity. The fast-paced technological developments have changed our means of doing things.
Among the many new elements that the technological influences have presented, some standards still remain and only change in form and methods. The principles underlying these standards remain constant and the same. One of these is audits. Audits have taken the form of automated software, which automation is mandatory
An audit is an assessment or evaluation of a company, organization, process, system or plan to check up the reliability and validity of its internal controls. The accounting cycle is observed while ascertaining both quantitative and qualitative measures of an enterprise’s performance. Of course, the findings are summarized in a report.
In the past, audits provide only a rational assurance that all financial statements of the company have no material error, normally involving statistical samplings. This minimum requisite may be surpassed however, if all financial statements are free from material misstatements, by numerical and qualitative factors, then they are said to be true and fair which is a stricter implementation. This approach is now the standard designated by the Public Company Accounting Oversight Board (PCAOB) last 2008. The plain reasonable assurance is now unsatisfactory.
The new and stricter requirement is called audit excellence. It is an audit conducted in accordance to generally accepted auditing standards (GAAS) to give valid assurance that the financial statements and disclosures are: (1) presented based on generally accepted accounting principles (GAAP); and, (2) are not materially misstated, either by errors or fraud. The audit is to be carried out by an external or internal auditor or an audit group at planned pre-defined time intervals.