Tuesday, October 26, 2010

Auditing relationships

Relationships are like auditing.

First, you got to understand the client's background and it's business process as well as it's operations.

You got to look as past year financial statements to determine how it has been performing thus far. If you are relying on internal controls, I.e whatever the client tells you, you got to make sure there are measures to ensure the controls are in place.

When there are differences within the threshold, leave it. But when it's so substantial that it's above the threshold, you got to investigate and account for the difference. Get the explanation from the client and retrieve supporting documents if possible. Basically to reduce the unexplained differences to below the threshold so that you can q it.

But there are certain accounts that are in nature very important such that any difference have to be accounted for, irregardless of how material it is. Just like in a relationship, there are certain things that one cannot accept, no matter how tiny it is, it just can't be tolerated

Psst; q means to ignore, in my auditing terms.

When the accounts are so bad that they have to be qualified( which is bad), I suppose you've got to relook whether you will wanna continue on the engagement or do sth to make sure that the accounts can be unqualified ( which is good)

Isn't relationships just like auditing? BlogBooster-The most productive way for mobile blogging. BlogBooster is a multi-service blog editor for iPhone, Android, WebOs and your desktop