Case Study: Auditor's Responsibility for Non-Financial Information As an experienced auditor at a reputable accounting firm, you've been assigned to audit a large manufacturing company's financial statements. In addition to financial data, the company also discloses non-financial information related to sustainability, environmental impact, and social responsibility in its annual report. Your audit team is tasked with evaluating the reliability and accuracy of both financial and non-financial information to provide stakeholders with a comprehensive understanding of the company's performance and operations. During the audit process, you implement various procedures to fulfill your responsibility for auditing non-financial information: 1. Understanding Non-Financial Reporting Frameworks: Begin by familiarizing yourself with relevant non-financial reporting frameworks and standards, such as the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB). These frameworks provide guidelines for disclosing non-financial information and help assess the completeness and reliability of such disclosures. 2. Assessing Management's Processes and Controls: Evaluate the processes and controls implemented by management to collect, compile, and report non-financial information. This involves reviewing policies, procedures, and data collection methods to ensure accuracy, consistency, and transparency in non-financial reporting. 3. Testing Data Accuracy and Completeness: Conduct substantive testing to verify the accuracy and completeness of non-financial data disclosed in the annual report. This may include reviewing supporting documentation, performing analytical procedures, and testing the reliability of data sources used for non-financial reporting. 4. Evaluating Key Performance Indicators (KPIs): Assess the appropriateness and reliability of key performance indicators (KPIs) used to measure the company's sustainability and social responsibility efforts. Verify the calculation methodologies, data sources, and underlying assumptions to ensure the integrity of KPI reporting. 5. Reviewing External Assurance Reports: Consider external assurance reports, if available, from third-party providers or internal audit functions that assess the company's non-financial performance. Review the scope, findings, and conclusions of these reports to gain insights into the effectiveness of management's controls over non-financial reporting. 6. Assessing Alignment with Organizational Objectives: Evaluate the alignment of non-financial disclosures with the company's strategic objectives, values, and stakeholder expectations. Determine whether non-financial reporting provides meaningful insights into the company's sustainability initiatives and social impact. 7. Communication with Stakeholders: Engage in dialogue with key stakeholders, including management, board members, and external parties, to gain perspectives on the relevance and reliability of non-financial information. Address any concerns or discrepancies identified during the audit process and provide assurance on the credibility of non-financial disclosures. Objective Type Question: Based on the case study, which step is essential for auditors to fulfill their responsibility for auditing non-financial information? A) Assessing Management's Processes and Controls B) Reviewing External Assurance Reports C) Testing Data Accuracy and Completeness D) Communication with Stakeholders

The CPA's role in performing audits is important to our society because: O an audit of financial statements helps investors and others know that they can rely on the information presented in the financial statements. O auditors have the primary responsibility for the information contained in the financial statements. auditors issue reports on the accuracy of each financial transaction. auditors provide direct financial advice to potential investors.

Ashavin

Steve Ankenbrandt, president of Beeb Corporation, has been discussing the company’s internal operations with the presidents of several other multidivision companies. Ankenbrandt discovered that most of them have an internal audit staff. The activities of the staffs at other companies include financial audits, operational audits, and sometimes compliance audits.   Required: Describe the meaning of the following terms as they relate to the internal auditing function: a. Financial auditing.       b. Operational auditing.       c. Compliance auditing.