Semester 4, Lesson 7 (52)
AUDITING
I. Read the following words and word combination and learn their meanings
by heart:
Audit ['Ldit], auditing - аудит; an auditor - аудитор; an evaluation [rvxlju'eiSn]
оцінка; confidence ['kOnfidqns]
довір'я; complete [kqm'pli:t] повний;
exact [ig'zxkt]
точний; reliable [ri'laiqbl] надійний;
departure [di'pRCq]
відхід, відхилення, відступ; judge [GAG] судити, суддя; fair [fea] справедливий; to appoint [q'pOint] призначити; to approve [q'pru:v] затверджувати; to
link (with) - з'єднувати; joint-stock [GOint stOk]
акціонерний капітал; to run
- управляти; running ['гAnIN] управління;
to entrust [in'trAst]
довіряти; staff [sta:f] персонал;; prevention [pri'venSn] запобігання;
a fraud [frLd]
шахрайство, in compliance - у відповідності,
to account for – звітуватися за
щось, to account to – звітувати перед кимось, to suffer losses- зазнати
збитків, gain – прибуток, дохід
II. Try
to repeat a tongue twister several times, as quickly as possible, without
stumbling or mispronouncing:
Say this sharply, say this sweetly;
Say this shortly, say this softly;
Say this sixteen times in succession.
III. Read and translate text 17, ask questions to the underlined sentences,
pay attention to the underlined words:
TEXT 17 AUDITING
Auditing is
closely connected with Accounting. The traditional definition of auditing is a
review and an evaluation of financial records by a second set of
accountants.
There is another more modern definition. "An
audit is the independent examination of and expression of opinion on the
financial statements of an enterprise by an appointed auditor in compliance
with statutory obligation." (David Choppy).
The main
purpose of the audit is to give the user of the financial statements confidence
that they give a true presentation of the position of the company at a
certain date. There are two types of audit.
An internal
audit. It is a control by a company's own accountants. They check for complete,
exact and reliable data. Internal auditors also look for departures from
the methods for recording business transactions which are established by a
company.
An
independent audit is a review of financial
statements and records by an accountant not belonging to the company.
Such auditors have to judge if the accounts present a true and fair view of the
company's financial position.
In the USA
they use the term "a fair presentation" which means the same what
British term "a true and fair view" means.
Who appoints
auditors? Senior executives and advisors of the company do it. Then the
candidates are to be approved by the owners of the share capital at the
company's assembly (meeting).
Auditors
write an audit report. They also may write a "management letter"
to directors. They may underline some weak points and recommend to
improve operating procedures.
The creation
of the audit function is linked to the growth of the joint- stock company.
Shareholders are often not involved in the day-to-day running of a company.
They entrust this role to the directors. The directors, in their turn,
need to account to the members of the company during each financial period.
The role of
financial statements is to show the way the company was run during this period.
Therefore, the report of the auditor is addressed to the members of the
company.
The auditor
tries to ensure that the accounts give a true picture of the position. To
achieve this the auditor needs to go beyond the accounting function within
the company.
The auditor
often looks at the way in which the other parts of the business work. It is
common for the auditor to discuss the activities with the members of staff working
in different departments of the company, not only in the accounting or finance
departments. The understanding of the business as a whole is very
important for auditing.
It is also
important to keep in mind such two points. First, the auditor gives his
opinion in the report. The latter gives some level of assurance. But
this assurance is never considered to be absolute. Second, the auditor has no duty relating to the prevention of fraud or other
errors.
On the other
hand, if the auditor does find any fraud he must make further investigations.
IV. Retell the text according to the
following questions:
1. What subject is audit
closely connected with? 2. What is auditing? 3. What is the main purpose of
auditing? 4. How many types of audit are there? 5. What is the difference
between internal and external auditors? 6.What is the difference between the
terms "a fair presentation" and "a true and fair view"? 7.
Who appoints auditors? 8. Who approves the candidates? 9. Who writes "a
management letter" to directors? 10. Do you see any difference between an
audit report and a management letter ? If you do, explain it.
V. Arrange the words into pairs of:
a) synonyms:
Require, a number of, demand,
independent auditor, many, purpose, adhere to, support, external auditor, aim,
opinion, point of view, stick to, assembly, true, meeting, fair, back.
b) antonyms:
Unqualified, lie, non-members,
sometimes,beyond, independent audit, qualified,
state, oppose, fairness, always, members, truth, dishonesty, internal audit,
within.
VI. Translate from Ukrainian into English:
1. Аудитором
може бути громадянин України, який має вищу
економічну освіту та безперервний (uninterrupted) стаж роботи. Це
робота аудитора, бухгалтера, ревізора, фінансиста, юриста. 2. Директором аудиторської фірми має бути
тільки сертифікований аудитор. 3. В аудиторській фірмі не менше
70% статутного капіталу має належати сертифікованому
аудитору. 4. Аудиторська фірма має право
надавати аудиторські послуги за умови,
якщо в її штаті (staff, personnel) працює хоча б один сертифікований
аудитор. 5. Сертифікацію аудиторів здійснює АПУ (Аудиторська Палата України). 6. Норми та стандарти аудиту
є обов'язковими для дотримання підприємствами, установами та організаціями.
7. Аудиторська Палата України затверджує норми та стандарти
аудиту.
VII. Translate from English into Ukrainian. Replace the infinitives in
brackets by the past indefinite or the past perfect:
1. He already (to prepare) a
report "Requirements for Additional Audit Information". He made it on
Monday. 2. This information (to involve) the past business experience of the
firm. 3. The man just (to explain) the purpose of investment. Didn't you
understand his point of view? 4. By the 5th of July they (to possess) the
building and capital. 5. Auditors informed that they not (to find) any fraud in
the case. 6. The judge at that trial said that they (to exercise) control over
the matter in the past.
VIII. Match the questions with the answers:
1. What companies are required
to publish accounting (financial) statement?
2. What is the difference
between auditing and inspection?
3. How much is the auditor's
job connected with the field of law, jurispundence?
4. Does the auditor take part
in investigation? I mean does he or she participate in trials?
5. What is the main function
of the auditor?
6. What I know is that the
auditor's report is a brief statement. It is addressed to the members of a
company. There are two types of report. What are they?
a) Auditing is an independent
financial control. It is carried out on contract basis between an owner and an
auditor. Inspection is a state control. The aim is to find out breach,
violation (порушення).
b) These are such companies as
commercial banks, insurance companies, trusts, joint-stock companies and other
financial institutions.
c) Well, first of all, the
auditor must know the business law, the economic legal mechanism, tax code.
d) The main duty of the
auditor is to report on the truth and fairness of the financial statement.
e) The auditor never
investigates for a trial. He or she never performs functions of lawyers, judges
or prosecutors. Everyone in this life should know his business, you know.
I) Yes, that's right. There is
"a qualified report" and "an unqualified report". Next time
I'll explain the difference.
IX. Match the word(s) on the left with the statement on the right:
a -
balance sheet 1. a list of all
employees and their wages
b - liquid assets 2. an accounting record where all business
transactions are initially entered
c – liability 3. money that is spent to purchase
goods or services provided by someone else
d - net
income 4. money remaining after all
expenses and taxes have been paid
e –
property 5. something that is
legally owned by a person or company
f – payroll 6. an
obligation to settle a debt; money owed to someone
g – equity 7. this
word has 2 meanings: "stock (shares)" and "net wort
h –
journal 8. the balance of cash
receipts minus cash payments over a given period of time
i - cash flow 9. cash or
something that is easily convertible into cash
j – expense 10. a
detailed summary of a person's or a company's financial condition at a specific
point in time, taking into account their assets, liabilities, etc.
X. Read and translate the meanings of the following terms. Translate the
sentences with them.
Tax (noun) - is a sum of money that a government takes from people's income,
company profits, the sale of goods, etc. to be used for public spending.
Tax (verb) - to demand a sum of money from a particular source.
1. The government has increased the tax on cigarettes. 2. Cigarettes are
heavily taxed in Britain. 3. The government claimed it would lower taxes. 4.
Corporation tax in Britain is a tax on the profits of limited companies. 5. The
tax isn't charged on the gain made from the sale of a person's home, car,
personal possessions sold for less than a certain sum. 6. The government always
taxes sales of alcohol.
Loss - 1) is money lost in a business deal; a financial deficit; 2) is a person
or a thing lost; 3)is the act of losing something; 4) is damaged or stolen
property for which the cost of replacing it is paid by an insurance company.
1. Small businesses have suffered substantial losses in recent years. 2.
The factory closed down with a loss of 500 jobs. 3. The marine insurance covers
loss or damage due to storms or collision. 4. Not all loss actually suffered by
the plaintiff as a result of the defendant's breach may necessarily be claimed.
XI. Translate
the following extracts in written form:
TEXT 18 TYPES OF AUDITORS
A. There are three
types of auditors: internal, governmental, and external (i.e., independent
auditors or certified public accountants). Internal auditors are employees of the
organization whose activities are being examined and evaluated during an
independent audit. The primary purposes of internal
auditing are to review and assess a company's policies,
procedures, and records and to review and assess a company's performance given
its plans, policies, and procedures. Therefore, internal auditors review
financial records and accounting systems, assess compliance with company policies, evaluate the
efficiency of company operations, and assess the attainment of company goals.
B. Governmental auditors include accountants employed by the U.S. General Accounting
Office (GAO). The GAO serves as the accounting and auditing branch of
Congress. These governmental accountants perform accounting and auditing tasks
for the entire federal government. In addition, most states have their own
accounting and auditing agencies, which resemble the GAO. Because the GAO and
its state counterparts are separate agencies from the departments and agencies
they audit, they are similar to external auditors. Consequently, federal and
state departments and agencies often have their own internal auditors, who
provide internal auditing services similar to those described above. Moreover,
GAO auditing largely has the same focus as internal auditing: examining
financial records, assessing compliance with laws and regulations, reviewing
efficiency of operations, and evaluating the achievement of objectives.
C. In contrast, the independent auditor is not an
employee of the organization being audited or an employee of the government. He
or she performs an examination with the objective of issuing a report
containing an opinion on a client's financial statements. The attest function
of external auditing refers to the auditor's expression of an opinion on a
company's financial statements. Generally, the criteria for judging an
auditor's financial statements are generally accepted accounting principles.
The typical independent audit leads to an attestation regarding the fairness
and dependability of the statements. This is communicated to the officials of
the audited entity in the form of a written report accompanying the statements.
XII. Individual work: read text
19 and answer the following question:
1. What is audit?
2. What is the audit designed
to?
TEXT 19 Who is an
auditor?
The word
"audit" can be used in a number of different contexts to describe
almost any type of checking operation, in the text the term will be used to
describe the process leading up to the expression of an opinion on the
published accounting statements by an independent firm of accountants.
In the UK,
all limited companies are required to have their accounts audited by a suitably
qualified independent accountant.
If the
accounting statements were not subjected to an independent audit, the
directors would be preparing the figures on which their own performance would
be assessed. Even if the majority of company directors are assumed to
be honest, they would have a motive to distort the information to be
published in the annual report. This would obviously undermine the
credibility of the statements. If users of the accounts can't be confident
of the figures, there is a little point in publishing them.
The audit
function is a vital component of the system of controls which is
designed to ensure 'that directors are accountable to shareholders and other
parties interested in the company. For example, the requirement that the
directors offer themselves for re-election on a regular basis would have little
value if the shareholders were not provided with a credible source of
information to base their voting decisions on. It is interesting to note
that in the USA, where only quoted companies are required to have an audit,
many companies are nevertheless compelled to have one done on a
voluntary basis because American banks often demand audited accounts
before they will grant a loan.
If the
auditor succeeds in increasing confidence in the quality of published
information, then it is unfair to describe him as a statutory nuisance.
XIII. Grammar. Clauses of
result
An adverb clause of result or
consequence is used
to say what
happens or what may happen
as a result of the action
mentioned in the main clause.
The chief conjunction used to introduce adverb
clauses of result are: so that, in order
that, so…that and such…that.
SO
THAT AND IN ORDER THAT
Both so that and in order that are used to talk about
purpose. In order that is
more formal.
Speak
clearly so that we
can all hear
you.
He
spoke loudly in order that everybody would hear him.
He
remained still so that people thought he had
died.
She
lived in England for six
months so that she
could perfect her English.
In clauses introduced by so that and in order that, we can use
present tenses to refer to
the future. Future tenses are
also possible.
Send
the letter by courier so that
she gets / will get it before Wednesday.
SO…THAT
So can
be followed directly by that-clauses.
It
was so hot that we didn’t go out.
She
was so weak that she couldn’t walk.
It
was so cold that we stopped playing.
That is often
omitted.
She
was so weak she could
barely stand.
It
was so hot I couldn’t go out.
The same idea can often
be expressed using the structure too…to.
It
was too hot to go out.
She
was too weak to walk.
It
was too cold to play.
SUCH…THAT
Such can be
followed by a that-clause.
She
spoke in such a low voice that nobody could hear
her.
It
was such a
hot afternoon that we
stopped playing.
XVII. Prepare Team presentation about the work of an auditor, an accountant
or a bookkeeper. Use the given phrases in your presentation if necessary
–
Ladies and Gentlemen! Friends! Let's start!
– Welcome to our presentation. Good
morning/afternoon (everyone)!
– Happy to greet you all on this glorious day on
this marvellous venue...
– We are the students of ... (name of the
University). I am...(name surname).
– Let me introduce my colleagues/friends.
–
As you all know, I am ... (name, position). Good to see you all.
Expressing
purpose
–
Our purpose/objective/aim today is ...
–
We are here today to tell you about ...
–
There are some important issues we want to go through this morning.
–
This morning we'd like to outline the concept we've developed for you.
–
Today we'd like to present ……
Schedule
–
Our presentation/talk will take/last about 20 minutes.
Structuring the presentation
–
During our presentation, we are going to focus on four main areas.
Firstly... Then my friend (name) will tell you about...
–
Finally, I want
to focus on
the future... and
summarize our ideas.
–
We are going to divide our
talk into four parts. First we’ll
give…
you...; after that... Finally, we'll be looking at...
–
This talk is divided into four main parts: firstly, we’ll explain...
etc.
–
Let us begin with/To start with/ Firstly, we'd like to look at...
–
Then/ Secondly, we'll be talking about...
–
Thirdly...
–
The fourth point will be about...
Conclusion
–
In conclusion I would say...
–
Let me just try and sum that up before we move on to
–
So, to sum up,
Closing
remarks:
– Thank you for your attention/time!
– If you have any questions, we'd be happy to
answer them.
– I'll now hand out...
– Thanks very much. Any questions?
– Well, that's all we have to say. Thank you for
listening.