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This paper gives a broad description of an auditing profession and all matters that are connected with this area.

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Introduction This paper gives a broad description of an auditing profession and all matters that are connected with this area. The first chapter concerns Polish auditing regulations. It focuses also on conditions that must be fulfilled to perform auditing profession in Poland. In the next three theoretic chapters it discusses types of auditing, internal control system and its importance for the company and relations between internal and external auditing. The fifth chapter is a description of an auditing process conducted in an inventory and warehousing cycle. The last chapter concerns professional ethics of an auditor, which is one of the most important fields of the reliable auditing. Chapter 1. Audit profession in Poland 1.1 Law regulations Accounting and auditing profession in Poland are performed in compliance with accounting law which came to daylight in 1995 and was further modificated. The most recent changes came to daylight on January 1, 2002. Not only does the law state accounting rules but also describes required course of action whilst auditing financial statements. Following categories of business entities are involved in the statutory audit of year financial statements: 1. Holdings 2. Banks and insurance companies 3. Entities emitting public securities, including pension and investing funds 4. Joint-stock companies 5. Other entities with staff of 50 employees or more, total sum of assets of at lest 2,5 million euro, and net incomes for the previous year of 5 million euro or more Moreover, half-year financial statements of investing funds are subjects to examinations. The accounting law deals with matters such as: general regulations, maintaining books, inventory, pricing of assets and liabilities and calculation of financial outcome, companies' consolidations, financial statements, examinations and publications of financial statements, data protection, penal responsibility, special and temporary regulations. Matters that are not regulated by the accounting law fell under jurisdiction of the Committee of Accounting Standards, which is responsible for issuing domestic standards. ...read more.


(Arens, 2000, p.290) Effective internal controls can reduce seriously planned audit evidence. The figure below shows that understanding internal control and assessing control risk in one of the parts of the whole audit process. Figure 1: Summary of the audit process Source: Arens,A.A, J.K. Loebbecke, 2000, Auditing: An integrated approach, New Jork, Prentice Hall Chapter 4: Internal and external auditing There are several types of auditors. The most common are certified public accounting firms and internal auditors. 4.1 Description of external auditing CPA's are responsible for auditing financial statements of the companies. There are some companies that are obliged to have audit of their financial statements. These are: publicly traded on the stock exchange companies, reasonably large companies and some non-profit organisations. The law regulations concerning this matter vary from country to country. CPA firms are called external auditors, because they are engaged by companies to audit financial statements but they do not work for a company. An external auditor can be also an individual who is entitled to audit financial statements. (Arens, 2000, p.13) 4.2 Description of internal auditing On the contrary, internal auditors are employed by companies to audit for management. They often act as a part of an internal control system. These are auditors one person staff or whole departments that report to the management on the company's performance. Their responsibilities are set by the management and they vary from one entity to another. They are also involved in compliance and operational auditing. Internal auditor is independent from the line functions in a company but he can not be independent from the company as external auditors are. Their main goal is to provide management with information required and helpful in the decision making process. (Arens, 2000, p.14) The role of internal auditing is increasing nowadays as the companies become more complex and multinational. Internal auditors are necessary to control the operations and financial transactions also. ...read more.


Responsibilities (Fulfill their responsibilities, exercising professional and moral judgments) "In carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities." Article II. The Public Interest (Act in a manner that serves the Public Interest) "Members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism." Article III. Integrity (Perform responsibilities with the highest sense of Integrity) "To maintain and broaden public confidence, members should perform all professional responsibilities with the highest sense of integrity." Article IV. Objectivity and Independence (Should maintain Objectivity and Independence in Fact and Appearance) "A member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services." Article V. Due Care (Should exercise Due Care, observe technical and ethical standards, and improve competence and quality of services and do his/her best). "A member should observe the profession's technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of the member's ability." Article VI. Scope and nature of Services (Should only provide the appropriate Scope and Nature of Services). "A member in public practice should observe the Principles of the Code of Professional Conduct in determining the scope and nature of services to be provided." 6.6 Conclusions A detailed examination of the rules that an auditor should follow shows that they are applicable to almost any profession not just auditors. The Code indicates the proper behavior and how an auditor should fulfill his obligations but any law can predict all the situations that auditor has to face in the real professional life. In these situations of ethical dilemmas, the strong moral set of personal values helps to solve problems. Sometimes a detailed analysis can lead to the best decision in the particular case.(Cosserat, 2000, p. ...read more.

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