Match them with their equivalents underlined in the text. Write down synonymous expressions in your notebook.

Text 4 Auditing

The traditional definition of auditing is a review and an evaluation of financial records by a second set of accountants. An internal audit is a control by a company’s own accountants, checking for completeness, exactness and reliability. Among other things, internal auditors are looking for departures from a firm’s established methods for recording business transactions. In most countries, the law requires all firms to have their accounts audited by an outside company. An independent audit is thus a review of financial statements and accounting records by an accountant not belonging to the firm. The auditors have to judge whether the accounts give what in Britain is known as a “true and fair view” and in the US as a “fair presentation” of the company’s (corporation’s) financial position. Auditors are appointed by a company’s most senior executives and advisors, whose choice has to be approved by the owners of the company’s equity at the company’s yearly assembly. Auditors write an official audit report. They may also address a “management letter” to the directors, outlining inadequacies and recommending improved operating procedures. This leads to the more recent use of the word “audit’ as an equivalent term for “control”: multinational companies, for example, might undertake inventory, marketing and technical audits. Auditing in this sense means verifying that general management instructions are being executed in branches, companies which they control, etc.

Discussion

These are some useful word-combinations in addition to the glossary that you should translate, memorize, and use while discussing the questions:

majority interest, internal audit/auditor, audit report, timely and accurate system, accounting equation, double-entry bookkeeping, accounting period, financial activities, source documents, daily summary, accounting instrument, current liabilities, longer-term liabilities, longer-term liability;

to keep records, to convert smth. into money, to list according to permanence, to subtract liabilities, to summarize financial position, to pay bills, to issue new shares, to distribute dividends, to measure activities, to develop source documents, to utilize source documents, to keep track of transactions, to reflect the changes, to finance growth, to repay debts, to allow for future losses, to verify execution.

1. Have you had courses in accounting or bookkeeping? Do you enjoy this type of work?

2. Did you ever have to keep detailed records of anything? Did you enjoy doing so?

3. To what end users does the information compiled by accounting system flow?

4. What are functions of the financial statements of a firm?

5. If you were an investor, what are some ways in which you would use the financial statements of a firm before investing in it?

6. What are the two categories of auditors?

7. What is the main function of auditing?

For your notes:

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