Financial statement audits are the inspections of a company’s financial statements that allow the investors and other parties involved to receive truthful information about an organization’s operations. They might include the elements that analyze the appropriateness of financial statement assertions. The internal controls practices of authorization and verification of expenses are the audit objectives that might help meet management assertions.
The first audit objective would be the setting of the practice of the internal control of authorization. This approach might help to guarantee that the company follows such management assertions as existence, completeness, accuracy or valuation, rights, obligations, presentation, and disclosure (Kewo, 2017). Mainly, it might demonstrate that the assets and liabilities exist, the statements provide complete and accurate information, a company has legal rights on these assets, and the presented data are fair.
The second internal controls practice that should become part of the plan for the audit is the verification of expenses. It might also help to guarantee the accuracy of management assertions. Mainly, it might prove that the costs are associated with the existing assets of an organization. In addition, it might demonstrate that the information about the expenses is complete and correct. Moreover, it would display the ownership rights of a company and the truthfulness of the presented data.
Thus, the internal controls might provide authorization and verification of expenses to demonstrate that an organization follows its financial statement assertions. Authorization might help to guarantee that all the employees provide complete and correct information according to their responsibilities. Verification of expenses might prove that the organization’s assets exist and the data about them is truthful, thorough, and presented according to the regulations.
Reference
Kewo, C. L. (2017). Does the quality of financial statements affected by the internal control system and internal audit?International Journal of Economics and Financial Issues, 7(2), 568-573.