Introduction

Auditing is important in the business world. Audit is strongly required by the company to provide a true and fair view in the financial statements. Due to the principals-agents relationship, a demand of auditors is needed as a third party have to protect the principles who are the shareholders. Auditing the account and financial statements, fraud and error can be corrected to protect shareholders wealth. Auditor and accountant are different. Auditors review the transactions which are prepared by the accountants to project a true and fair view of the financial position and also express opinion on the financial position. There are different types of auditors which carry different duties. The types of auditors have internal auditors, external auditors, government auditor and forensic auditor. There are also different type of audit which are financial statement audit, operation audit, compliance audit and forensic audit. True and fair view is important in the preparation of the financial position. To provide a financial position with true and fair view, auditors have to detect error and fraud on the financial position. Auditors cannot guarantee the financial position is absolutely accurate and free from bias. The ethics of the company is depend on the directors and the management. The policy that decided by the directors based on their style will affect the ethics of the company. Auditors will based on the ethics of the company to determine the level of risk in the company. If the company is in high risk which may contain many error and fraud, auditors will have to increase the number of the substantive testing on the accounts of the company.

Content
Nature, Purpose and Scope of Audit The word Audit comes from Latin word which has a meaning of to hear. Auditor at those days was hearing the accounts, revenue and expenditure. In the 1900, statutory audits are strongly required for the companies to detect any fraud and error happen. Although auditor is meant to detect fraud and error, but they are unable to detect all the fraud and error. Auditor exercises reasonable skills which are audit procedure to detect fraud and error. According to the audit procedures, there are limitations to detect all fraud and errors which are the use of sampling testing, Inherent limitation of internal control, audit evidence is persuasive not conclusive and use of auditors judgement. Auditors do not guarantee the accuracy of the financial statement. Audit is meant for detect fraud and error. The purpose of audit is to let auditor to express their opinion based on these financial position whether it is true or fair. Audit is also protecting the shareholders wealth which is managed by the management leaded by the directors. Audit is needed due to the principals and agents relationship. The important component in audit scope is chronology of audit. The chronology is to define the scope of audit, establish customer expectations, and identify the criteria used to evaluate the audit subject. Based on the result of assessing the system and internal control, testing and reviewing the financial statement, auditors have to express their opinion in the audit report. For examples for a condition of limitation of scope which are material and pervasive, a disclaimer of opinion will be issued. Distinction between accounting and auditing Accounting creates financial statement and other financial information that is useful for management. Record, classify, summary of day-to-day transactions of a systematic approach is the process of accounting with the purpose to provide financial information for decision making. The information prepares by the accountants present in the form of financial statement, thats covers the Statement of Financial Position, Statement of Comprehensive Income, Shareholders Equity Statement and Statement of Cash Flow. On the other hand, the auditing does not provide accounting information but it reinforces the reputation of financial statements that is the theme of the audit. Besides, the process of auditing is to review the transactions and the balances in the financial statement of the accounting records in order to express an opinion in a true and fair view of the financial position of the company. Furthermore, auditing also need to assure that the financial statement prepared was no material misstatement and comfortable with rules and regulations. Express an opinion on regardless all material respects, complete of preparing the financial statement and according to a suitable financial reporting framework is the purpose of auditing. A lot people confuses about the auditing with the accounting and some people think that the auditing as a subject of accounting. The reason is because auditing is most often related with examination of accounting data, and public accounting firms that carry out auditing and also provide accounting services.

The other reason is because the auditors report, audit partners is responsible for the audit will usually use the word accountants to sign the reports. Type of Audit There are different type of audit in the auditing such as Financial Statement Audit, Operational Audit, Compliance Audit and Forensic Audit. There are different functions of each type of audit. Financial Statement Audit is conducted to ascertain whether the overall financial statements are prepares according to the suitable accounting principles. The financial statement audit includes the audit on Statement of Comprehensive Income, Statement of Financial Position, and Statement of Changes in shareholders equity and cash flow statement together with the accounting policies. The objective of a financial statement audit is to determine whether the financial statements are free of material misstatement, example mistake make when bookkeeping process. An audit includes examining, on a test basis, facts supporting the amounts and disclosures in the financial statements13. Financial Statement audit present the fairly in all material compliments for the company financial position to let the outsider to check whether can lend the money or sell stock to the company6. Operational Audit carries on with the operating procedures and process of the organization to determine whether it is operating in effective and efficient mode. At the end of the operational audit, auditor will advised how the company going to improve the effectiveness and efficiency of the entire organizations operational system. Operational Audit can check whether the resource is wasting, or the employee do not do their best to help company generate more profit, the operational audit can help the company to save the cost and earn more profit and make the operating more efficiency and effective. The Operational audit also checks that whether the daily operational have achieve with the company plans. It also can help you to calculate the amount of purchase the raw material or things that need when operate the business, facilitates the granting of loan from lenders, facilitate insurance claims. Compliance Audit involves checking whether the organization compliance with the applicable laws, policies, regulations, and specific procedures set by the authority.3 For example, a compliance audit for a listed company may focus on whether the company have compliance with the stock market rulings, pays the apposite taxes, environment law and worker safety guidelines. This compliance audit usually give commend on how to improve in processes and controls used to make sure the company compliance with regulations. Forensic Audit is a special investigation audit that mostly focuses on fraud, criminal cases, shareholders quarrel or negligence. It required an advance investigation skills, knowledge and experience to achieve and enlarge information as legal evidence or for use by expert witnesses in the court of law. For example, the audit provided the computation of asset values in a separation proceeding, measurement of damages caused by an auditors negligence. Fact-finding to see whether a fraud has taken place, in what amount, and whether criminal proceedings are incurred. An external auditor is either self-employed, or is employed at a firm that is hired by the company. This type of auditor comes in as an independent third party in order to check records. Their reports are used

in order to help find errors, cut costs and improve general accounting4. They do not collusion with the company director because most of them do not have relationship with the director. Internal auditors are employees of the company that they are auditing. Large companies often have at least one auditor in their accounting staff. The duty of internal auditors is similar with the external auditors, but the internal auditors will be more efficient at checking the entire facts and figures for the single company because they just check for this company only4. True & Fair View Objective of external audit is to provide true and fair view opinion on financial statement in accordance with International Financial Reporting Standards (IFRS). International Standards on Auditing (ISA) have no actual meaning about true and fair view. True can be presented as factual information and conforms to reality without errors. Information must act in accordance with accounting standards and related to legislation. True also take in account have been correctly extracted from book and record to financial statements11. It must consistent with information in financial statement. Fair generally means information is understandable, impartial and unbiased and in compliance with standards and rule. It should reflect the commercial substance of the transactions of entity11. Fairness depends on facts that can be verified by evidence, unbiased and materiality that may affect user decision. Auditor express opinion based on true and fair view is to protect shareholders interest. Auditor should be an independent body with intention of user convinced in the report. Independent means not subject to another authority or influence by other element when express opinion12. Express opinion is different from certification of 100% due to reasonable assurance. Reasonable assurance is no absolute and the event may or may not happen. Auditing has some inherent limitation. There are sampling testing, internal control, evidence is persuasive not conclusive and auditor judgment. Auditors use sampling testing because impossible to check every transaction. They pick up randomly. Therefore, it is always a risk because of time consuming, economic reason and lack of resources. There is a limitation of internal control such as human error or management overriding. Besides, audit evidence is persuasive not conclusive which means auditor opinion is based on data gathered which is not conclusive to draw conclusion. Auditors judgment is auditors use their professional judgment to make decision. Inappropriate judgment may happen due to unethical behaviour. As conclusion, in reaching auditor opinion whether accounts show true and fair view, the auditor is required to exercise his skill and judgment. thical in Audit The professional ethics mean the successful performance in healthcare businesses, financing and banking businesses, legal professions and others that direct impact on the daily life of people. Professional ethics are highly trusted and integrity standard of conduct. Auditor is an accountant who audits to verify the accuracy of financial records and accounting of a business or government practice.

The purpose of audit is to ensure the financial statement is prepared in complete and accuracy. The problem of todays ethics is manipulation of financial statement to misleading public for certain purposes such as avoidance of paying corporate tax. Some companies even increase the profit in order to make financial statement look good. The problem of ethics more related to personality where there is conflict of interest. For example, finance controller who act as financial preparer and also internal auditor might have conflict on this. Therefore, independence is very important to ensure audit being done in ethical. The knowledge and competent of the officer will also determine the ethical. Thus, some threats will lead to conflict of interest are self-interest threat, self-review threat, advocacy threat, familiarity threat, and intimidation threat. Firstly, self-interest threat provides in the auditors benefit from an audit clients financial interests. This threat exists when the auditors have its client companys share ownership or joint ventures with audit clients. Secondly, self-review threat exists in an audit firm or audit team members will check the status of their subject, former members of the responsible. Auditors provide accounting services and other non-audit services at the same time, so they might actually audit their own work. Thirdly, advocacy threat happens in an audit firm or audit team member or sponsor may be considered for the audit clients opinion. Additional, a virtual close relationship between auditors and audit clients will cause a familiarity threat. For example, auditor who has a director, officer or employee of the clients company as a close family member may have this threat. Lastly, intimidation threat provide in an audit team members and the exercise of agent from an objective professional judgment, as the pressure in the termination of the audit clients advanced location services to audit clients, dominant personality to be intimidated. Ethic is very important in audit to ensure the output of audit is true and fair. Ethics is important to the independence of auditing to maintain the trust of the company and the level of implementation of the necessary audit function. The importance of ethics is once when the companies doing business in the speed of thought, prudent internal auditors, and their risk management thought process. Rather, an enterprise not without accounting professional ethics of business. The measurement for ethical in audit is doing the right thing according to audit framework and regulation. Ethical is the principal of audit to ensure integrity, objectivity, confidentially, competency being meet and professional behaviour. We can measure by trust, integrity, confidentiality and objectivity. Firstly, Integrity means that members should be reflected in the professional, commercial and personal integrity of financial relations. It means not only fair trade and authenticity. Secondly, objectivity is the members should strive for the objective in all professional and business judgments. Thirdly, confidentially means that the members should do professional work of confidentially. Information obtained in the business relationship, should not be disclosed outside the enterprise, unless there are appropriate and specific authority or obligation to disclose.

Conclusion
In the audit subject, we know that in the corporate world, auditing is highly demanded to ensure the financial position are free from error and fraud. This is because without auditing the accounts, agents who are the directors and management team may abuse the shareholders wealth. The shareholders are depending the audit report which produced by the auditor to ensure that their investment is protected. In the corporate world, auditors who act as a third party to audit company accounts have to be independent in order to express opinion. Although auditors have expressed their opinion based on the financial position, there will be divergence. This is because auditors practise sampling method while auditing the accounts. Auditors are unable to audit all the company accounts in a limited timeframe. After completing this research, we found out that auditing is a challenging job in the business industry. Our lecture has taught us the basic of auditing which will help us in the future when we have a job of either accountant or auditor. Most of the shareholders are depending on the auditors report and this has made importance of the auditors. With the lectures given by Ms Ng, we found out that auditing is an interesting subject. This is because Ms Ng has guided us along to the real world with real case which are interesting in order to prepare ourselves to enter into the real world. She have also encourage us to do more research and prepared well before entering the lecture. Ms Loo has also supporting us along the tutorial by asking us to have a try to attain the question before having the answer. With this method, we have learnt that we have to make a try and do research rather than waiting for the others to provide answers.