Posted by forex at 1:22 AM
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1. Gain an understanding of the business. To properly conduct an audit, the auditor must first have an understanding of the business and its particular risks and characteristics. The auditor should discuss operations and corporate policies with management, and he also should consider industry norms and other background information.
2. Prepare an audit program tailored to the foreign currency operations. Because of the diverse nature of foreign currency businesses, the auditor should specifically design the audit procedures in relation to the business model. Thus, if it is a retail currency exchange business in a travel hub, the audit procedures will differ from those developed for a foreign exchange trading firm.
3. Conduct audit fieldwork procedures and substantive tests. The purpose of audit fieldwork is to gather evidence upon which to base a professional opinion on the condition of the financial statements. Thus, assertions of valuation, occurrence, completeness and existence inherent in financial statements should be tested. Frequently, depending on internal controls, auditors seek to verify account balances, reconcile historical exchange rates with revenue calculations, obtain confirmation of outstanding liabilities, and inquire as to risk management and compliance matters to assess the business as a going concern.
4. Present the audit opinion report to management. Based upon the totality of the findings and the application of professional judgment, the auditor should prepare the audit report and render an opinion on whether the financial statements are free from material misstatement or, if appropriate, render a qualified or adverse audit opinion.