This diploma paper is amed on the area of external audit and it's purpose is to present audit profession from theoretical and practical side. The paper is divided into three parts, where the first two parts introduce theoretical background, historical development of audit profession, relation of external and internal audit and the most important legal rules and regulations, which concern the area of audit. Besides this basic information is also mentioned the new bill about auditors, which has to implement European Commission Directive, considerating compulsory audit of final account, into Czech system of law. The third part is practical, and shows how audit works on particular contract.

The nature of the auditor-client relationship is a complex aggregate involving a number of groups and individuals between both parties. Although auditor-client relationship is an important subject in the accounting and auditing literature, what has not been extensively studied is the complex relationship between the clients accounting staff and the external audit group at subordinate organization level. Thus, the purpose of this study is to dig deeper into the relationship between clients accounting staff and external audit team consisting of junior and senior auditors and to find out what characterizes this relationship. We also aim to look it from knowledge management and trust perspectives since these are special characteristics of both professions. In order to find empirical results we conducted a qualitative research with a case study by interviewing three accountants and one controller in the same mother company who do financial work for four subsidiaries. They all work together with several auditor groups and therefore could provide us a good comparison to our results. Our study reveals that the relationship is maintained on the subordinate level by the senior auditor who works not only as an auditor but also as a relationship manager. Furthermore, we identify the fact that lower competence of junior auditors creates problems in relationship with client’s accountants. Therefore, our accountant respondents are more likely to allocate low trust to inexperienced junior auditors, specially due to the fact that accountants are the ones teaching the junior auditors in specific accounting issues which is time consuming and often leads to irritation on the accountants side. However, accountants’ trust towards the senior auditors turns out to be high due to recognized expertise knowledge of senior auditors based on our interviews.

This diploma work treats about external and internal auditor in the complex. First of all it focuses on characteristics of personality, then on their education and practise of profession. There is also a part devoted to organizations which associate them. At the close it analyses their common features and differences.

Made available in DSpace on 2016-04-25T18:40:26Z (GMT). No. of bitstreams: 1 Evandro Luis Rezera.pdf: 1092863 bytes, checksum: a00d8527585a3c0b1ac33c29716dbadf (MD5) Previous issue date: 2007-12-14 / Trust is the main product it is expected from the auditor s work, because it provides credibility to its report and, consequently, to the audited financial statements. In addition to high ethical standards and technical expertise inherent to its reviewer role, the external auditor, in order to generate the expected trust, depends on the perception society has in relation to auditor s ethical and technical attributes. Aiming to obtain the perception from the professionals that work fo private companies and that are directly involved with the external auditor s work, it was reviewed the bibliography considered relevant on auditing and concerning subjects, in Brazil and abroad, especially ethics, fraud, independence and factors that potentially affet the auditing quality. 28 companies participated in this analysis, through the perceptions obtained from 28 executives that work for such companies. The data was collected through a questionnaire applied between April and May 2007. The main results of this analysis comprise the classification of the external auditors as the less responsible agent for identify relevant fraud in an audited entity, compared to other four agents, and the attribute of the grade 4 to the auditor, in a scale ranging from 1 to 5, in relation to its efficacy to identify relevant frauds and errors that affet the financial statements. The main conclusions of this work are that the auditing clients do not exaggerate the responsibility of the auditor to detect relevant frauds and errors to the financial statements, and believe the auditors are efficient to identify such frauds and errors. In addition, this work identified certain areas of concern to the auditor, that may support a thorough understanding of the current situation of the profession and its future challenges / Confiança é o principal produto que se espera do trabalho do auditor, porque confere credibilidade ao seu relatório e, conseqüentemente, às demonstrações financeiras das entidades auditadas. Além do atendimento a elevados padrões éticos e da necessária capacidade técnica inerente ao papel de revisor, o auditor independente, para gerar a confiança esperada, depende da percepção da sociedade em relação aos seus atributos éticos e técnicos. Com o objetivo de captar a percepção dos profissionais que atuam em empresas de capital aberto e que estão diretamente envolvidos com o trabalho do auditor independente, revisou-se a bibliografia considerada relevante sobre auditoria e temas afins, tanto no Brasil quanto no exterior, especialmente ética, fraude, independência e fatores com potencial de afetar a qualidade dos trabalhos de auditoria. Participaram do estudo final 28 companhias, através das respostas de 28 executivos. A coleta de dados foi realizada com a aplicação de questionário respondido pelos participantes no período de Abril a Maio de 2007. Os principais resultados obtidos foram a classificação do auditor independente como o menos responsável, em uma lista de cinco agentes, pela identificação de fraudes relevantes numa entidade, e sua avaliação com o conceito 4 (tanto agregando os resultados pela media aritmética, quanto pela mediana), numa escala de 1 a 5, quanto à sua eficácia em identificar fraudes e erros relevantes às demostrações financeiras. As principais conclusões desse trabalho foram que os clientes de auditoria não superavaliam a responsabilidade do auditor quanto à detecção de fraudes que afetem de forma relevante as demonstrações financeiras, e tampouco julgam que os auditores não são eficazes na identificação de erros e fraudes. Ainda, o trabalho identificou certas áreas de atenção para o auditor, que podem auxiliar no entendimento da situação atual da profissão e dos seus desafios futuros

Inom den kommunala revisionen samarbetar förtroendevalda och externa revisorer för att tillsammans genomföra en granskning av kommunens räkenskaper och förvaltning. Kommunfullmäktige utser politiskt utvalda förtroendevalda revisorer och de ska enligt kommunallagen biträdas av externa revisorer för att kunna fullgöra sitt uppdrag utifrån god revisionssed. Majoriteten av kommunerna i Skåne väljer att upphandla en extern revisionsbyrå på marknaden, där PwC, KPMG samt EY tillhörande the Big 4 konkurrerar om att bli upphandlade. Relationen mellan de externa och förtroendevalda revisorerna är outforskad och syftet med uppsatsen är att undersöka relationen mellan de förtroendevalda revisorerna och de externa revisorerna, och vidare granska hur samarbetet fungerar och för vem revisionen skapar värde.   Tre kommuner i Skåne har medverkat i uppsatsen där tre förtroendevalda samt fyra externa revisorer från kommunernas upphandlade revisionsbyrå intervjuats. Utifrån studiens empiriska material har tre aspekter av relationen identifierats: relationens uppkomst, relationens utformning samt relationens slutliga framställning. Relationen uppstår efter en upphandlingsprocess där relationens utformning bland annat influeras av de fem elementen reliance, competence, independence, earlier work performancesamt trust. De förtroendevalda revisorerna måste uppleva en tillit till det arbete som de externa revisorerna utför eftersom de externa framställer underlag, rapporter och revisionsberättelsen åt de förtroendevaldas vägnar. Competence, independence, earlier work performancehar en inverkan på graden av upplevd relianceoch trustär ett element som är av stor vikt för ett effektivt samarbete och revisionskvalitén. Relationens slutliga framställning är en revisionsberättelse som är tänkt att bidra som underlag till kommunfullmäktige och skapa värde för allmänheten. / The municipal audit system in Sweden consists of political appointed and external auditors that together audit the municipality's accounts and management. The municipal council elects politically appointed auditors, which are assisted by external auditors in order to fulfill their assignment according to the Swedish municipal law. The majority of the municipalities acquire external auditors from PwC, KPMG or EY. The relationship between the political and the external auditors is unexplored and the purpose of this thesis is to investigate the relationship between the political and the external auditors, and examine how the cooperation works and to whom the audit system creates value for.  Three political auditors and four external auditors from three municipalities were interviewed. Based on the empirical material, three aspects of the relationship have been identified: the origin of the relation, the relationship's configuration and the relationship's final output. The relationship begins when the municipality selects an external audit firm. The relationship's configuration is influenced by five elements: reliance, competence, independence, earlier work performance and trust. The political auditors experience a high level of confidence in the work made by the external auditors, as the external auditors construct the audit reports on behalf of the political auditors. Competence, independence and earlier work performance have an impact on the extent of reliance and trust is of great importance for an effective collaboration. The output of the relationship is an audit report that is intended to be of value for both the council and the public.

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<p>Title: The engagement letter influence on the expectation gap – An empirical study on the expectation gap between auditors and small incorporated companies.</p><p>Keywords: Engagement letter, Expectation gap, Misunderstanding, Auditing, Audit, External Auditor, Client, Communication, Knowledge, General view</p><p>Problem: People outside the audit society have some mood points in what an external auditor is and what she/he does. Not everybody can understand an audit report and connect the auditor’s responsibility to it. These mood points mutually with ignorance about the auditor and its tasks can result in disagreement between auditors and interested parties, who have different needs and expectations on the auditor, which leaves the auditor-role with a built-in conflict in its role. The authors, in this essay, investigate whether, the relative new law, who request the auditors to establish an engagement letter with the clients, has decreased the misunderstandings between auditors and small limited companies.</p><p>Purpose: This essay is meant to investigate if the engagement letter has decreased the expectations gap between external auditors and clients.</p><p>Method: Facts has been gathered with the help of interviews with external auditors as well with clients. The questions that were asked during the interviews were half-structured, which gave the respondent the freedom to answer the questions freely but within the scope that was interesting for this essay.</p><p>Result: This study show that FAR through its new regulations in RS, in this particular essay, the engagement letter has not fulfilled its purpose to decrease misunderstandings between external auditors and clients, in this case, small firms. The engagement letter has been received as a contract as one of many. Our study shows that there have been no evident differences in knowledge-transfer between external auditors and clients. The engagement letter is designed by auditors with expertise which is not understood by the clients, which leads to a lack of interest by the clients that also reflects on the auditors. It seems though the engagement letter considers as insurance, above all by the auditors in situations when an actual misunderstanding, with legal actions as consequences, occurs.</p> / <p>Titel: Uppdragsbrevets påverkan på förväntningsgapet – En empirisk studie på förväntningsgapet mellan revisorer och små aktiebolag</p><p>Nyckelord: Uppdragsbrev, Missförstånd, Förväntningsgap, Revision, Små aktiebolag, Revisor, Klient, Kunskap, Kommunikation, Allmän syn</p><p>Problem: Det finns delade meningar bland människor utanför revisionskåren om vad en revisor är och vad han/hon gör. Långt ifrån alla kan läsa en revisionsberättelse eller koppla revisorns ansvar till den. Den delade mening och okunskap om revisorn och dennes arbete kan leda till meningsskiljningar och missförstånd mellan revisorn och intressenter som har olika behov och förväntningar på revisorn, vilket lämnar revisorn med en inbyggd konflikt i sin roll. Författarna undersöker i uppsatsen om lagen om införandet av uppdragsbrevet har lett till ett minskat missförstånd mellan revisorer och mindre aktiebolag.</p><p>Syfte: Uppsatsen syftar till att undersöka om införandet av uppdragsbrevet har minskat förväntningsgapet mellan revisor och klienter.</p><p>Metod: Data har insamlats med hjälp av djupintervjuer med revisorer såväl som klienter. Frågorna som ställdes under intervjuerna var ostrukturerade där respondenterna kunde svara fritt på frågorna men där författarna styrde in diskussionen i områden som var aktuella för uppsatsen.</p><p>Resultat: Uppsatsen visar att FAR genom nya stadgarna i RS, i detta berörande fall, uppdragsbrevet, inte lyckats minska missförstånden mellan revisorer och klienter i småföretag på ett förebyggande sätt. Uppdragsbrevet har mottagits som ett avtal, bland många, där ingen märkbar skillnad kring kunskapsöverföringen mellan revisorer och klienter kan identifieras. Uppdragsbrevet utformas av revisorer vilka besitter expertkunskaper, inom revision, kunskaper som klienterna inte innehar, som i sin tur leder till ett ointresse bland klienterna, som även reflekteras på revisorerna. Däremot upplevs uppdragsbrevet som en trygghetsfaktor för framförallt revisorer vid eventuella fall där ett missförstånd, med rättsliga påföljder, skulle uppstå.</p>

Title: The engagement letter influence on the expectation gap – An empirical study on the expectation gap between auditors and small incorporated companies. Keywords: Engagement letter, Expectation gap, Misunderstanding, Auditing, Audit, External Auditor, Client, Communication, Knowledge, General view Problem: People outside the audit society have some mood points in what an external auditor is and what she/he does. Not everybody can understand an audit report and connect the auditor’s responsibility to it. These mood points mutually with ignorance about the auditor and its tasks can result in disagreement between auditors and interested parties, who have different needs and expectations on the auditor, which leaves the auditor-role with a built-in conflict in its role. The authors, in this essay, investigate whether, the relative new law, who request the auditors to establish an engagement letter with the clients, has decreased the misunderstandings between auditors and small limited companies. Purpose: This essay is meant to investigate if the engagement letter has decreased the expectations gap between external auditors and clients. Method: Facts has been gathered with the help of interviews with external auditors as well with clients. The questions that were asked during the interviews were half-structured, which gave the respondent the freedom to answer the questions freely but within the scope that was interesting for this essay. Result: This study show that FAR through its new regulations in RS, in this particular essay, the engagement letter has not fulfilled its purpose to decrease misunderstandings between external auditors and clients, in this case, small firms. The engagement letter has been received as a contract as one of many. Our study shows that there have been no evident differences in knowledge-transfer between external auditors and clients. The engagement letter is designed by auditors with expertise which is not understood by the clients, which leads to a lack of interest by the clients that also reflects on the auditors. It seems though the engagement letter considers as insurance, above all by the auditors in situations when an actual misunderstanding, with legal actions as consequences, occurs. / Titel: Uppdragsbrevets påverkan på förväntningsgapet – En empirisk studie på förväntningsgapet mellan revisorer och små aktiebolag Nyckelord: Uppdragsbrev, Missförstånd, Förväntningsgap, Revision, Små aktiebolag, Revisor, Klient, Kunskap, Kommunikation, Allmän syn Problem: Det finns delade meningar bland människor utanför revisionskåren om vad en revisor är och vad han/hon gör. Långt ifrån alla kan läsa en revisionsberättelse eller koppla revisorns ansvar till den. Den delade mening och okunskap om revisorn och dennes arbete kan leda till meningsskiljningar och missförstånd mellan revisorn och intressenter som har olika behov och förväntningar på revisorn, vilket lämnar revisorn med en inbyggd konflikt i sin roll. Författarna undersöker i uppsatsen om lagen om införandet av uppdragsbrevet har lett till ett minskat missförstånd mellan revisorer och mindre aktiebolag. Syfte: Uppsatsen syftar till att undersöka om införandet av uppdragsbrevet har minskat förväntningsgapet mellan revisor och klienter. Metod: Data har insamlats med hjälp av djupintervjuer med revisorer såväl som klienter. Frågorna som ställdes under intervjuerna var ostrukturerade där respondenterna kunde svara fritt på frågorna men där författarna styrde in diskussionen i områden som var aktuella för uppsatsen. Resultat: Uppsatsen visar att FAR genom nya stadgarna i RS, i detta berörande fall, uppdragsbrevet, inte lyckats minska missförstånden mellan revisorer och klienter i småföretag på ett förebyggande sätt. Uppdragsbrevet har mottagits som ett avtal, bland många, där ingen märkbar skillnad kring kunskapsöverföringen mellan revisorer och klienter kan identifieras. Uppdragsbrevet utformas av revisorer vilka besitter expertkunskaper, inom revision, kunskaper som klienterna inte innehar, som i sin tur leder till ett ointresse bland klienterna, som även reflekteras på revisorerna. Däremot upplevs uppdragsbrevet som en trygghetsfaktor för framförallt revisorer vid eventuella fall där ett missförstånd, med rättsliga påföljder, skulle uppstå.

In the recent years auditing scandals all around the world, deficient internal control has attracted a lot of attention. This has contributed to further requirements on insight and internal control. Those scandals have seriously damaged the auditor’s profession and contributed to a reduced trust among the public. Therefore an extensive work to recover and stringed the trust was started all around the world. In the USA, the Sarbanes- Oxley Act was introduced in year 2002. In Sweden, the Code group has carried out a similar work and introduced the Swedish Code of Corporate Governance in July 2005. The purpose of the introduction of the Code of Corporate Governance is that it should con-tribute to an improved governance of the Swedish listed companies, but also serve as a role model to other types of companies that are of public interest. This increases the demands on the company’s internal control whose purpose is to secure the company’s assets and protect the owner’s investments. The general information that the board and the CO submit in the annual report can in some cases, when the review demand large industry and market knowledge, be difficult for an external auditor to evaluate. Internal auditors usually possess large industry knowledge and therefore the collaboration with the external auditor becomes even more important. Internal and external audit are two professions with different roles, responsibilities and functions. However, both profes-sions are important for a company and those that have an interest in it. The purpose of this thesis is to examine both from the external and internal auditor’s perspective if the collaboration between them has been influenced by the introduction of the Swedish Code of Corporate Governance. This study has been carried out with a qualitative research method and data has been collected through personal interviews with three external and three internal auditors within the Stockholm area. This study has shown that the code have not yet had that much impact, but it has increased the external auditor’s work load in form of advice on how to implement the code. The code is expected to increase the collaboration between the external and inter-nal auditor within the internal control. Since the external auditor will become more de-pendant on the work of the internal auditor, more planning will be necessary. The in-vestigation further showed that if an increased regulation is to lead to a better aditing is dependent on the board, how they choose to structure and implement the new regula-tions within the company. / Senaste årens redovisningsskandaler runt om i världen där bristande internkontroll uppmärksammats, har bidragit till att ytterligare krav på insyn och internkontroll har tillkommit. Dessa skandaler har allvarligt skadat revisoryrket och lett till minskat förtroende hos allmänheten. Därför har omfattande arbete för att återfå och stärka förtroendet hos allmänheten inletts runt om i världen. I USA infördes Sarbanes- Oxley Act år 2002. I Sverige har ett motsvarande arbete bedrivits av Kodgruppen som introducerade Svensk kod för bolagsstyrning i juli 2005. Syftet med införandet av bolagskoden är att den skall bidra till förbättrad styrning av svenska börsnoterade bolag men även tjäna som förebild för andra typer av bolag med spritt ägar- eller allmän intresse. Detta ställer högre krav på bolagets interna kontroller vars syfte är att säkerställa bolagets tillgångar och skydda ägarnas investeringar. Den allmänna information som styrelsen och VD:n lämnar i årsredovisningen kan i fall, då granskningen kräver stor branschkunskap och marknadskännedom, vara besvärlig för externrevisorn att bedöma. Internrevisorer besitter vanligtvis stor branschkunskap och därför blir samarbetet med externrevisorn ännu viktigare. Intern och externrevision är två professioner med skilda roller, ansvar och funktioner, dock är båda lika betydelsefulla för ett bolag och dess intressenter. Syftet med uppsatsen är att undersöka ur både intern och externrevisorns perspektiv om samarbetet mellan dem har påverkats av införandet av bolagskoden. Undersökningen har genomförts med hjälp av en kvalitativ undersökningsmetod och data har insamlats genom personliga intervjuer med tre intern och tre extern revisorer i Stockholmsområdet. Undersökningen har visat att koden inte har haft så stort genomslag än, men att den har ökat externrevisorns arbetsbörda i form av rådgivning, vad gäller implementeringen av koden. Den förväntas öka samarbetet mellan intern och externrevisorn vad gäller de interna kontrollerna. En ökad samplanering av deras insatser kommer att bli nödvändig, då externrevisorn kommer att bli mer beroende av internrevisorns arbete. Undersökningen visade också att om ökad reglering leder till bättre revisionsarbete beror mycket på styrelsen, hur den väljer att strukturera upp och implementera de nya reglerna inom företaget.

<p>In the recent years auditing scandals all around the world, deficient internal control has attracted a lot of attention. This has contributed to further requirements on insight and internal control. Those scandals have seriously damaged the auditor’s profession and contributed to a reduced trust among the public. Therefore an extensive work to recover and stringed the trust was started all around the world. In the USA, the Sarbanes- Oxley Act was introduced in year 2002. In Sweden, the Code group has carried out a similar work and introduced the Swedish Code of Corporate Governance in July 2005. The purpose of the introduction of the Code of Corporate Governance is that it should con-tribute to an improved governance of the Swedish listed companies, but also serve as a role model to other types of companies that are of public interest. This increases the demands on the company’s internal control whose purpose is to secure the company’s assets and protect the owner’s investments. The general information that the board and the CO submit in the annual report can in some cases, when the review demand large industry and market knowledge, be difficult for an external auditor to evaluate. Internal auditors usually possess large industry knowledge and therefore the collaboration with the external auditor becomes even more important. Internal and external audit are two professions with different roles, responsibilities and functions. However, both profes-sions are important for a company and those that have an interest in it.</p><p>The purpose of this thesis is to examine both from the external and internal auditor’s perspective if the collaboration between them has been influenced by the introduction of the Swedish Code of Corporate Governance.</p><p>This study has been carried out with a qualitative research method and data has been collected through personal interviews with three external and three internal auditors within the Stockholm area.</p><p>This study has shown that the code have not yet had that much impact, but it has increased the external auditor’s work load in form of advice on how to implement the code. The code is expected to increase the collaboration between the external and inter-nal auditor within the internal control. Since the external auditor will become more de-pendant on the work of the internal auditor, more planning will be necessary. The in-vestigation further showed that if an increased regulation is to lead to a better aditing is dependent on the board, how they choose to structure and implement the new regula-tions within the company.</p> / <p>Senaste årens redovisningsskandaler runt om i världen där bristande internkontroll uppmärksammats, har bidragit till att ytterligare krav på insyn och internkontroll har tillkommit. Dessa skandaler har allvarligt skadat revisoryrket och lett till minskat förtroende hos allmänheten. Därför har omfattande arbete för att återfå och stärka förtroendet hos allmänheten inletts runt om i världen. I USA infördes Sarbanes- Oxley Act år 2002. I Sverige har ett motsvarande arbete bedrivits av Kodgruppen som introducerade Svensk kod för bolagsstyrning i juli 2005. Syftet med införandet av bolagskoden är att den skall bidra till förbättrad styrning av svenska börsnoterade bolag men även tjäna som förebild för andra typer av bolag med spritt ägar- eller allmän intresse. Detta ställer högre krav på bolagets interna kontroller vars syfte är att säkerställa bolagets tillgångar och skydda ägarnas investeringar. Den allmänna information som styrelsen och VD:n lämnar i årsredovisningen kan i fall, då granskningen kräver stor branschkunskap och marknadskännedom, vara besvärlig för externrevisorn att bedöma. Internrevisorer besitter vanligtvis stor branschkunskap och därför blir samarbetet med externrevisorn ännu viktigare. Intern och externrevision är två professioner med skilda roller, ansvar och funktioner, dock är båda lika betydelsefulla för ett bolag och dess intressenter.</p><p>Syftet med uppsatsen är att undersöka ur både intern och externrevisorns perspektiv om samarbetet mellan dem har påverkats av införandet av bolagskoden.</p><p>Undersökningen har genomförts med hjälp av en kvalitativ undersökningsmetod och data har insamlats genom personliga intervjuer med tre intern och tre extern revisorer i Stockholmsområdet.</p><p>Undersökningen har visat att koden inte har haft så stort genomslag än, men att den har ökat externrevisorns arbetsbörda i form av rådgivning, vad gäller implementeringen av koden. Den förväntas öka samarbetet mellan intern och externrevisorn vad gäller de interna kontrollerna. En ökad samplanering av deras insatser kommer att bli nödvändig, då externrevisorn kommer att bli mer beroende av internrevisorns arbete. Undersökningen visade också att om ökad reglering leder till bättre revisionsarbete beror mycket på styrelsen, hur den väljer att strukturera upp och implementera de nya reglerna inom företaget.</p>