Day: January 6, 2022

Provides assurance and credibility to the accounts for the benefit of potential investors. Used for detection of errors and frauds which could lead to the failure of an organization. Audited accounts are used by the organization to raise finance from Read More …

There are three qualities necessary for an independent auditor. These are: Competence Independence and Integrity Competence Any person who intends to practice as an audit must be thoroughly trained and must prove his/her competence. In Kenya only members of ICPAK Read More …

The auditor can from time to time provide other services other the auditing. These services may include:  Writing up the books of account Balancing books of accounting Setting up accounting systems Computerizing manual accounting systems Financial advise Mergers and take Read More …

There are two main objectives of auditing: Primary objective and Subsidiary objective. The primary objective of any audit is to produce a report regarding the truth and fairness of the company’s financial statements so that any users of these statements Read More …

When the managers report to the owners or shareholders and stakeholders there is the likelihood that they will try to paint a picture that they delivered as agreed with the stakeholders or shareholders. The reports are likely to: Have misstatements Read More …

Financial statements usually three forms namely: Income statement, Cash flow statement and Statement of financial position. The financial statements may be produced quarterly, semi – annually or annually. The company’s Act recommends that they must be produced annually. There are Read More …

Creditors lend to the firm at a rate which depends on the riskiness of the firm as perceived by the creditors. The creditors provide the firm the finances for a specific time period. A lot can happen during that period Read More …

The creditors are contributors of debt capital. They are not in any way involved in the day to day running of the business. After the provision of debt finance, the shareholders are expected to manage the finances along with the Read More …

There is the assumption that the managers and shareholders left on their own will each attempt to act in their own self interest. The managers are likely to pursue goals which do not maximize the shareholders wealth. The goals would Read More …

The shareholders are the real owners of the company through equity capital contribution. However, they may not be involved directly in the day to day running of affairs of the business. The shareholders may not have the necessary skills and Read More …