Scene 1 Venue : Office of Larnoo Enterprises Player : 1. Non Executive Director 2. Executive Director 3. Financial Accountant Archie : Do we have any legislative obligation to be audited? Nijina : No! There is no legislative obligation for a medium size company to be audited under Corporate Law.
However, according to Statement of Accounting Concept 1, we are reporting entity, and under Corporate Law Section 292(1), a reporting entity has to be audited.
Yin Mei : So, what is Accounting Concept 1, could you explain it more detail? Nijina : If there is separation of ownership from control and management, the company is a reporting entity, such as our company.
Yin Mei : What is the difference between accounting and auditing.
Nijina : Accounting is the process of identifying, measuring and reporting economic transactions, while auditing is an independent examination of financial or non-financial information for the purpose of providing an assurance on the credibility of that information to intended users.
Archie : If we do auditing, What kind of benefit can we get from it.
Nijina : It provides an access to capital markets, lower cost of capital, deterrent to inefficiency, fraud, control and operational improvements.
Archie : Okay, please find some information to engage an auditor for auditing our company.
Scene 2 Venue : Office of Worthington partners Player : 1. Audit Partner 2. Audit Senior 3. Audit Senior 4. Audit Assistant 5. Audit Assistant Hui Leng : We have received a letter from the Larnoo enterprises, the management is interested to engage our firm as an auditor.
Rob : It may be a good chance to take up a new client! Hui Leng : I hope so! But it is time to discuss something for presentation to the client before next meeting.
Regina : Ok!...