Explanations Regarding Significant Differences †Free Samplers

Questions: What is the expectation gap in auditing? What do users expect from an audit? Answers: Introduction Today accounting research have gained significant value whether the state requires financial statements to special companies through the super intendency tax administration or the board of administration request them. To give an extra value to the figures shown in the statements Financial, and therefore the importance of the work performed by an auditor, this topic thoroughly deals with the responsibility of the auditor when performing an audit with regard to the detection of errors and irregularities, which proceeds after the detection. (Cosserat, Rodda, 2012)What impacts they have on the financial statements especially in United Kingdom and New Zealand. Audit expectation gap Substantive analytical procedures are procedures that the account reseacher uses to assess the reasonableness of an account and consist in comparing the record with the gap expectations. Substantive analytical procedures can be applied to evaluate balance sheet accounts and / or profit and loss accounts. Substantive analytical procedures should be performed first rather than detail tests as the result of these can determine the scope of the detail tests (Gray, Manson, 2011). This are standards used in both UK and New Zealand. two of the most used substantive analytical procedures used in these two countries are: 1) Analysis of trends 2) Reasonability tests Definition of expectation Gap Trend analysis consists of reviewing the behavior of a particular account of the financial statements over a period in order to identify significant variations. Trend analysis is usually compared to earlier periods. Example:To review staff costs, the auditor may review the monthly performance of the personnel expenses account for the year audited and compare it with the monthly performance of the previous year's personnel expenses. In the analysis of trends, equally, we can analyze the trends between related accounts. Example: The monthly sales behavior is directly related to cost of sales. Taking into account the above, we can perform a monthly analysis of the behavior of sales vs. cost of sales.It is recommended that we graph these analyzes, as they allow the auditor to detect important variations in a simple way. Due to the standards set by international governing bodies, we find that these procedures are common in both UK and New Zealand . For the trend analysis to be effective, it is advisable that the auditor has prior knowledge of the client that allows him to create expectations. This knowledge is usually acquired in the planning stage of the audit and allows the auditor to know that important changes are going to occur in the company and that they will finally be reflected in the financial statements. Research findings It refers to calculations that are made in order to estimate the amount of an account and involves the use of operational and / or financial information. Example:In a company that sells a single product per kilos the auditor can determine the value of sales by taking the total kilos sold during the year and multiplying it by an average price per kilo.These calculations can often become too complex, however, a key to the success of these procedures is the knowledge of the factors that affect the accounts, with this knowledge the auditor can raise the evidence in such a way as to ensure its effectiveness (Noor Afza Amran, n.d.). Reasonability tests can avoid or reduce the detail tests, which involve a greater investment of time for the auditor in cases where there is no trust in controls or we do not test the controls. However, it is important to note that these calculations must be performed with reliable, independent and verifiable information that provides the auditor with adequate and adequate evidence. Reliable information: Independent information: The information used for the calculation should, as far as possible, come from other areas than the accountant. Example: in the two countries If we are going to make a global calculation of the payroll expenses it is not advisable to take the information that is in the financial statements, but we take the information generated by the payroll area directly. Verifiable information: The base information for the calculation should be easy to verify by persons other than those who made the calculation. 1) Define the objectives of the test 2) Determine the information to be used according to the account to be tested. 3) Define the maximum difference to be accepted by the auditor, between the calculation and the recorded 4) Implementation of the procedures for determining the auditor's expectation 5) Compare the expectation against what is recorded in accounting 6) Obtain explanations regarding significant differences 7) Determine audit differences and / or detailed procedures if necessary The duty to be is an expression referred to a judgment of value that imposes characteristics related to the right, the fair, the optimum, the predictive, the most convenient, in the end, the due. Duty is denotes compulsory and universal validity recognition for a social group, which is identified with the ideal proposed by the duty to be (Moizer, 2005). The duty to be falls on ideas, objects, people, groups of people, actions, behaviors, actions, among others.. Writing the investigative piece of the duty of being an audit may be considered subjective; However, it has developed as an investigation and reflection based on the state of the art, of the elementary theoretical body of the audit.The problem that arises is theoretical, but its development and solution go beyond the accounting professional practice of the audit, not only seen as work but also as an institution in which the public trust of society is poured out. The accounting profession evolves through its interdisciplinary frontiers, and the point that historically has marked its progress is the audit. The evolution of the audit is a consequence of the social responsibility that has been given to it. The auditor's social responsibility is embodied in the public faith, this is both in the U.K and New Zealand When the public accountant provides public trust issues a personal guarantee based on his professional qualities, the audit reports the actual state of a matter of interest, thus the notary restores that intangible heritage called trust; Thanks to the confidence that the public accountant offers when he is a public donor; The social and economic relations that allow the existence of a market are sustained (Moroney, 2016). Theoretical concept in both the U.K and New Zealand The audit should be built through a coherent thinking with the reality that provides guidelines and reflection to the accounting professional, broadening horizons and collapsing obstacles that do not allow it to expand. The current state of the audit requires a reconception in its theoretical construction regarding the concept of audit and the disarticulation of its approaches. We must recognize that the majority of accounting professionals performs in the accounting and auditing of books with tax and financial purposes, creating A barrier to their professional field of action by typecasting only in the accounting-financial sector. If we limit public accounting to the small universe of financial transactions, its field of action would present poverty in its levels of articulation and linkage with the reality of the organization with respect to its internal and external variables. It has been tied, for many years, Study of the professional accounting field to the accounting and financ ial aspects of organizations, rooted in the idea that the audit is only financial-accounting, although many theorists have expressed a broader concept of audit, the idea that has persisted both in Audit literature as in its teaching is the accountant-financial; For that reason we must reflect on its object of study to direct it towards the multidisciplinary, scientific and professional convergence that is presented in the organizations, thus responding to the needs of society and its organizations. Expectation Performance in Accounting Research The idea has been generated that only On the accounting-financial can be given public faith, reason why has diminished the reach of the indispensable social requirement that is the public faith, guarantee that a careful investigation has been carried out regarding the audited situation and that its results have been Impartially communicated, providing an opinion fully grounded in science and technology. Public faith is the exclusive office of notaries and accounting professionals, the question in question is: what are the issues that a public accountant can Give faith, some limit it to the financial-accounting field, others are directed at other levels such as: management Ion, the operation in terms of its efficiency, effectiveness and economy, information systems, control models, risk forecasting, to mention some of the many aspects in which knowledge is required, which can be guaranteed by the professional suitability That only a notary as is the public accountant can offer. the au dit must recognize the past to address the future. Currently, the professional practice of the audit is limited to the legal requirements, following the rule of doing as it is written, for this reason, the degree of creativity to design new methods of evaluation and control seems to become a depleted path, producing as characteristic the typical monotony of the technique and losing the reconstructive and reconceptualizing capacity that promotes science (Paterson, 2015). A change in the accounting profession is needed that broadens horizons and produces As a consequence of the standardized performance of the accounting profession, a strong attitude of indifference is recognized by the auditor With administrative representation of the organization, which generates gaps in the efficient communication of information, producing a juxtaposed extrapolation of opposing positions with ignorance of the expectations to be reached, imbalances in the degree of knowledge of the intentions, plans, strategies, objectives that They lead the corporate purpose and cause a loss of synergy in the provision of audit services. The success of the audit is in placing the organization's shirt on the auditor's part and playing for it, through the advice that is the Characteristic of differentiation in the Provision of accounting research services by introducing added value to the provision of such services. Counseling is based on the skills and knowledge of the accounting professional coupled with their understanding of the organizational situation; However, the advice of the auditor has to rely on the cooperative interaction with the client, so that there is no wastage of inofficious efforts about the reality of the organization. To maintain an efficient communication between the auditor and the administrative representation of the organization better directs the audit work, insofar as the solutions that the auditor can provide coincide with the limitations and management strategies. The audit work must be characterized, mainly, by Efficient communication with those who have an interest in knowing about the subject under study and with all those who are involved in the knowledge of the situation audited, to form a comprehensive knowledge with which to synthesize from the multiple scientific and technical knowledge that Converge in organizations. There is a lot of talk about audits. But what we expect from an audit is really the result that will offer us the same? Several studies show that the expectations of audit users do not exactly match the final result of an audit. This gap between what the user expects and what the auditor offers is what generates the so-called "expectations gap". The audit expectation gap is the distance between the expectations of the public about an audit of accounts and the auditor's own vision of what the audit work should be. The two points of view are not coincident and this creates a conflict. Although it may seem a recent issue, the first definition of "expectation gap" was given by C.D. Liggio in 1974. he definition of an audit has already been extensively discussed , but as a summary, we will indicate that an audit of accounts is a process of checking that the financial information of a company conforms to the Generally Accepted Accounting Principles and to the Plan General Accountant. T his verification is certified by the issuance of an audit report. In the report, the auditor expresses his opinion on the financial statements of the company. The audit report is the visible result of the whole process, and where the reliability of the financial information is revealed. In general both in the UK and New Zealand, external users of financial information tend to have high expectations of audit work, in the sense of assuming: that an financial report with a "clean" (unqualified) opinion implies a full guarantee that the information is correct; that the account institute detect any cases of fraud that may occur in the audited company; That auditor can warn of risks that may occur in the near future. But the reality is that the objective of accounts is that of a very specific work of review and verification that the financial information is adequate and adapts to a specific normative framework. That is the purpose of the audit. The review has a specific scope and the report presents the conclusions of the work, following a very specific structure and terminology. The reality is that an audit fails to review the entirety of the company's information and the findings of the report may be somewhat cor- rected or with a vocabulary that is not sufficiently transparent to some of the readers interested in that report. The present study is based on the document issued by the International Auditing and Assurance Standards Board (IAASB), "Enhancing the Value of Auditor Reporting: Exploration Options for Change", which invites interested parties to comment on the points examined, The possible changes and, in general, the perceived utility on the audit reports. The purpose of this article is to inform the reader about the future of the audit process (Audit Reporting), where the (IAASB) analyzes the views of the key users of the financial statements Audited, in order to know the benefits of the audit reporting process; In this paper, we analyze the most relevant identified issues that the audit report process faces and explore possible changes in it (Taebi Noghondari, 2012). Identified Issues In Expectation Gaps and accounting research The information obtained by the IAASB, in its different research studies, public discussions and consultations, identifies the following key issues related to the relevance and usefulness of the audit reports: There is a recognition of the value of the audit of financial statements and their reports, however, the content of the auditor's report is not as useful or informative as it may be. Users seek to obtain more relevant information about the entity and the audit process to assist them in evaluating the financial conditions of the entities and the quality of the audit. Some users consider that the auditor's opinion can be improved by changing the structure and wording of the opinion. According to these issues, the concepts "expectations gap" and "information gap" are analyzed, which explain the differences between what the user requires or expects and what the financial reporting process offers them. 1) The Gap of Expectations This is defined as the difference between what users expect from the audit and the audited financial statements and the reality of what is an audit itself. Reducing the expectations gap is one of the challenges of the audit reporting process, through improvements in communication about what audit work involves the drafting of the auditor's report and changes in the auditor's work 2) The Gap of Information This is defined as the difference between the information that users consider necessary to make adequate investment decisions and the information that is available to them, through audited financial statements or other available public information. This information gap can be reduced through a combination of the delivery of additional information from the entity issued by the management and those in charge of corporate governance or, as the case may be, by the auditor, through the opinion of the auditor. Regarding the information gap, it is of interest to users, in order to reduce it, to know, through the opinion of the auditor, the views of this on some aspects of the entity; For example: key businesses, auditing and operational risks that the auditor considers to exist, adequacy of accounting policies, changes in accounting policies, methods and judgments made in the valuation of assets and liabilities, significant transactions. Conclusion It is important that the accounting profession in United Kingdom and New Zealand, through theInstitute of Public Accountants, AC, is increasingly involved and attentive to possible changes arising from international consultations and to analyze trends in the reporting process. In the same way, it is important to consider in these discussions and analyzes the particular points of view of the key users in UK and New Zealand of the audited financial statements: financial institutions, investment groups, regulatory entities, auditing entities, among others (Taebi Noghondari, 2012). Finally, the possible changes in the audit report process described above allow us to analyze and interpret the future of the audit work of financial statements and their medium-term reports and, in turn, be aware of what the Key user of the audited financial statements when analyzing or consulting the auditor's report. Today, harmonized government accounting in public entities must provide financial and budgetary information, which requires, on the one hand, to be generated with quality and timeliness, both in terms of control and processing of records and transactions and in carrying out the preparation and Presentation of the results on a comparable basis for all governmental instances. In order to coordinate the harmonization of accounting, the National Council for Accounting This body plays a very important role, since the normative instruments (accounting, economic and financial) that it issues are binding for public entities, which must, if necessary, make modifications, additions or amendments to its regulatory framework. In this sense, the participation of the schools of Accountants is fundamental, as they represent the collegial profession whose technical capacity and experience must be paid in the process of harmonization of government accounting. That is to say, the paradigm shift consists of moving from budget accounting based on cash flow to a wealth accounting that recognizes the infrastructure that must remain in the institutions, so that, regardless of changes of government, they remain to the service of the citizenship. General features The objective of the independent accountant in research in conducting a review of, results of operations and cash flows and that they do not contain material misstatements As well as the evaluation of, the purpose of any kind of audit is to add some degree of validity to the purpose of the review. And according to auditing standards, the independent auditor has the responsibility to plan according to the objectives of the audit in which he must have the information and reasonableness of the financial statements, taken as a whole, to establish the adequate application of the economic resources And financial statements of an institution, as well as their protection, which will allow the Public Accountant and Auditor to issue an independent opinion on the reasonableness of the financial stateme. References Cosserat, G., Rodda, N. (2012). Modern auditing. Chichester: John Wiley and Sons. Gray, I., Manson, S. (2011). The audit process. United Kingdom [etc.]: South-Western. Houghton, K., Jubb, C., Kend, M., Ng, J. (2010). The Future of audit. Acton, A.C.T.: ANU E Press. Jayasinghe, K., Nath, N., Othman, R. The public sector accounting, accountability and auditing in emerging economies. Lee, M. (2009). Principles and contemporary issues in internal auditing. Shah Alam: McGraw-Hill. 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