Audit and Assurance Case Study(SANCTUARY GROUP PLC) Essay

Audit and Assurance Case Study(SANCTUARY GROUP PLC) - Essay Example The Company's subsidiary, Bravado International Group Limited, operates as a merchandising company that specializes in exploiting intellectual property rights for more than 100 artists and brands. Live Agency even represents over two hundred twenty acts for live performance. Also, its business is carried out by the Company's subsidiary, Helter Skelter Agency Limited. This company operates as a booking agency. The following paragraphs will explain how audit strategy is related to the fairness of the financial statements of the. An audit(Pickett, 2006) is defined as the evaluation of an organization, process, system, project or product. In accounting, an audit is the independent assessment of the fairness where a company's financial statements are presented by its mangers or board of directors. It is done by competent, independent and objective person or persons, known as auditors or certified public accountants, who then issue a report on the results of the audit(Whittington, 1995). And, the audits are performed to determine the validity and reliability of financial information. Also, it provides an assessment of a company or a business' system of internal control. The accounting and related recording systems must adhere to generally accepted standards set by governing bodies that regulate how businesses should presented in terms of balance sheet, income statement and statement of cash flows. The audit should be based on random sampling and it should not be an assurance that financial statements are error free. Auditing also provides assurance for third parties or external financial statement users that such statements present 'fairly' a company's financial condition and results of operations.Further, effective risk management(Frame, 2003) will not happen overnight. Managers who want to enable their organizations to be better at managing risk must recognize that the road to effective risk management is definitely long, twisting, and occasionally hazardous. Beginning the journey is not as difficult. It may be even be triggered by a one-page directive issued by the chief operating officer of the organization following a small disaster, exhorting the organization to implement good risk management practices. But after the uninitiated, when the confetti has settled and the cheerers have been thrown away, the journey toward effective risk management is an uphill battle. In some way, what happens at this point is typical of many high-sounding corporate decisions. When light shines on the initiative, everyone scrambles to support it. When the senior managers turn their attention to other issues, the initiative begins to lose momentum, and without active support from top management, it falters. It may even hang on for a while until it dies and is buried. The risk related approach to external audit in the audit of Santuary Group Plc is based on control risk, audit risk and inherent risk. Audit risk is used to describe what is usually applied when in case of an audit of the financial statements of an entity. The first objective of the audit of the balance sheet, in