Objective Of The External Audit Accounting Essay

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The objective of our audit is to provide customers with auditors' report expressing an opinion on the financial statements referred to above. We will conduct our audit in accordance with U.S. generally accepted auditing standards.Accordingly, we will examine, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assess the accounting principles used and significant estimates made by management and evaluate the overall financial statement presentation.

Objective of the external audit (2)

• Concurrent with our audit, we will examine, in accordance with standards established by

the American Institute of Certified Public Accountants, management's assertion about

the effectiveness of the Company's internal control over financial reporting as of (fiscal

year-end date - December 31, 20XX). The purpose of our examination is to

express an opinion as to whether

management's assertion is fairly

stated, in all material respects, based

upon reasonable criteria.

Objective of the external audit (3)

• As required by professional standards, we will meet with

the Audit Committee to discuss (1) any

relationships that may reasonably be

thought to bear on our independence

and (2) the quality of the Bank's

financial reporting. The discussion of financial reporting will

cover, but will not be limited to: significant accounting policies; accounting

estimates, judgments and uncertainties; accounting adjustments; and unusual

transactions.

Who does the auditor work for?

• "This will confirm the arrangements between XYZ Bank

(The Bank) and The External Auditor for

the audit of the Bank's consolidated balance sheet as of December 31, 2000,

and the related consolidated statements of income and cash flows for the year

then ending."EA - Interaction With Others

• Board of Directors/Audit

Committee

- Report on management

- Report on financial statements

- Report on independence

- Report on controls

What does the auditor do? (1)

• The objective of our audit is to provide you with our auditors' report expressing

an opinion on the financial statements referred to above. We will conduct our

audit in accordance with U.S. generally accepted auditing standards.

Accordingly, we will examine, on a test basis,

evidence supporting the amounts and

disclosures in the financial statements,

assess the accounting principles used and significant estimates made by

management and evaluate the overall financial statement presentation.

What does the auditor do? (2)

• The objective of our audit is to provide you with our auditors' report expressing

an opinion on the financial statements referred to above. We will conduct our

audit in accordance with U.S. generally accepted auditing standards.

Accordingly, we will examine, on a test basis, evidence supporting the

amounts and disclosures in the financial statements, assess the

accounting principles used and

significant estimates made by

management and evaluate the overall financial statement

presentation.What does the auditor do? (3)

• The objective of our audit is to provide you with our auditors' report expressing

an opinion on the financial statements referred to above. We will conduct our

audit in accordance with U.S. generally accepted auditing standards.

Accordingly, we will examine, on a test basis, evidence supporting the

amounts and disclosures in the financial statements, assess the accounting

principles used and significant estimates made by management and

evaluate the overall financial statement

presentation.

EA - Interaction With Others

• Management

- Suggestions for improvement

- Report on financial statements

What has to be communicated to the Bank? (1)

• Generally accepted auditing standards require that we obtain reasonable,

rather than absolute, assurance that the financial statements are free of

material misstatement, whether caused by error or fraud. Accordingly, a

material misstatement may remain undetected. Also, an audit is not designed

to detect error or fraud that is immaterial to the financial statements. However,

we will bring to your attention

immaterial misstatements and any

fraudulent or illegal acts of which we

become aware during our audit.

What has to be communicated to the Bank? (2)

• Any "reportable conditions" (defined by the

American Institute of Certified Public Accountants as "significant deficiencies in

the design or the operation of internal control that, in the auditor's judgment,

could adversely affect the organization's ability to record, summarize and

report financial data consistent with the assertions of management in the

financial statements") identified during our audit of the financial statements or

our examination of internal control over financial reporting (see below) will be

communicated to you, along with our

recommendations for improvement.

What has to be communicated to the Bank? (3)

• As required by the Federal Deposit Insurance Corporation Improvement Act of

1991 ("FDICIA"), we will also discuss

management's assertion regarding the

effectiveness of internal control over

financial reporting before those reports are filed by

management with the appropriate regulatory agencies.

EA - Interaction With Others

• Federal Banking Regulators

- Report on financial statements

- Report on reportable conditions

- Informal conversations

- Regulatory compliance - LIMITED

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