This chapter generally describes the roles and responsibilities assumed by an organization’s internal and external auditors. In theory, internal auditors are responsible for assessing the extent to which financial data conform to the expectations and standards established by management, and external auditors render an independent opinion of the fairness of financial statements in conformity with generally accepted accounting principles. In practice, however, both internal and external auditors often provide services to an organization that go far beyond these limited descriptions. Use your own background and work experience to describe some of the services you’ve seen performed by internal and external auditors that go beyond the general roles described above.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Question 2: Theory Vs. Practice
This chapter generally describes the roles and responsibilities assumed by an organization’s internal and external auditors. In theory, internal auditors are responsible for assessing the extent to which financial data conform to the expectations and standards established by management, and external auditors render an independent opinion of the fairness of financial statements in conformity with generally accepted accounting principles. In practice, however, both internal and external auditors often provide services to an organization that go far beyond these limited descriptions. Use your own background and work experience to describe some of the services you’ve seen performed by internal and external auditors that go beyond the general roles described above.
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