Audit comprises an integral of the modern business development. In fact, the development of business is practically impossible without an effective auditing because auditing maintains the reliable functioning of business, responsible work of managers and employees and effective control over performance of professionals working within an organization. At the same time, auditing should be carefully planned to meet its ultimate goals and to become a truly effective process. To put it more precisely, planning is essential for audit because it contributes to the proper, effective organization of the auditing process. Auditors plan their steps from the preparation of the audit, its beginning and development to meet the ultimate goals of the audit. In such a way, auditors can meet their goals through the audit planning, whereas the failure of auditors to plan the audit may lead to disastrous effects because, in such a case, the audit is not systematic and rather fragmentary than overwhelming. At this point, it is important to lay emphasis on the fact that an effective audit is possible only on the condition of the involvement of all elements and units of the organization that is being audited. Ideally, there should be no inconsistencies and no unaudited elements in the course of the audit. Otherwise, outcomes of the audit would be ineffective. Therefore, the audit planning is an essential condition of the effective audit because it allows auditors to organize the process of audit and to reach the ultimate goals of the audit at full extent.
The personality and professional skills and abilities of auditors are also of the utmost importance for the overall success of the audit. In actuality, an auditor should have a number of professional skills and personal attributes, which can help him or her to perform successfully. In this respect, it is possible to single out analytical thinking which is of the utmost importance for an auditor. Analytical thinking helps consistently to the auditing process because it maintains the effective professional performance of an auditor, preventing him or her from errors and misinterpretations of the information and data collected in the course of auditing. Organizational skills are also essential for the effective audit process. To put it more precisely, organizational skills of an auditor define his or her ability to organize the process of auditing effectively that means that the auditor will systematically conduct the audit and due to his or her analytical thinking he or she will process and analyze the information collected to make adequate and accurate conclusions about the current position of a company or organization. Boldness is a personal characteristic which helps an auditor to conduct audit and reach positive and reliable outcomes. In fact, boldness is essential for an auditor because often, in the course of auditing a large corporation, there is a risk of making an error that can undermine the reputation and position of the corporation in the market. In such a situation, an auditor should be bold enough to take decisions and make objective and accurate conclusions concerning the current position of the company, regardless of effects of his or her conclusions. In such a situation, objectivity is another characteristic a good auditor should possess to conduct auditing successfully. In this respect, it should be said that objectivity is an essential condition of the successful work of an auditor because subjective attitude or conclusions made by an auditor may have disastrous effects for the company audited. In addition, an auditor should be able to share knowledge with his or her colleagues because, today, auditing often involves the work of a team of auditors within which it is necessary to share knowledge and information to accomplish the audit successfully. At the same time, the ability of an auditor in a team is another important ability which defines the overall effectiveness of his or her work and reliable outcomes of the audit.
A weak control environment can have a significant impact on the auditing process and its outcomes, especially if a risk-based approach is adopted. In actuality, it should be said that a weak control environment increases the vulnerability of an organization to numerous risks. At the same time, in the context of a risk-based approach to auditing, the weak control environment can make the outcomes of the audit unreliable because auditors can hardly take into consideration all risk factors the audited company is exposed to. The weak control environment cannot provide auditors with the possibility to assess adequately all the risks because they can emerge spontaneously in response to the changing business environment. Therefore, it is necessary to strengthen the control environment to define clearly all potential risk factors that can influence outcomes of the audit. Otherwise, it will be impossible to evaluate adequately the current position of the company and the risk-based approach can be ineffective in the weak control environment.
The initial assessment of inherent risks associated with the audit of the financial statements of Tuffbuild Limited can be affect by several factors. First, the weak control environment one of the major inherent risks that can affect the assessment of the financial statement of the company because its financial position can change under the impact of unpredictable risk factors the company is vulnerable to. In addition, the company is focused on public contracts that means that the company is vulnerable to the risk of high dependence of the company on the current economic development and public funds that can be invested and to fund projects implemented by Tuffbuild Limited. At the same time, the company operates nationwide that increases inherited risks because there is a risk of inadequate assessment of the current position of the company because of the lack of information or inaccurate information on the current development of units located in different parts of the country. In addition, the nationwide operations can raise the risk of inadequate communication between units of the company and, thus, the risk of the inadequate assessment and ineffective audit arises. Finally, the company needs consistent rebuilding and renovation that naturally implies substantial investments and funds to be spent on rebuilding and renovation. However, it is difficult to assess all the risks associated with such rebuilding and, what is more important, the costs of such rebuilding may be difficult to assess. In such a way, auditors can face a risk of inadequate assessment because of this risk factor.
In actuality, the use of effective methods of auditing contributes to the consistent improvement of its effectiveness and reliability. In this respect, it should be said that the use of observation in the course of audit of Tuffbuild Limited should be applied in the course of the auditing of the companyâ€™s performance, including the work and productivity of employees, the effectiveness of their work and its impact on the overall companyâ€™s performance. The observation helps to assess the extent to which the work of employees and organizational performance are effective and productive. In addition, it helps to reveal internal problems within the organization. The inspection is necessary to apply when the production facilities of the company are audited. In the course of inspections, auditors should notice and adequately process all the information related to the process of production. In such a way, on collecting the information on production process within the company, auditors will be able to compare it with accounting data and financial statement of Tuffbuild Limited. The enquiry is worth applying in the course of auditing at the managerial level, including top managerial level of the company. At this stage, it is important to collect as much information as possible and to compare and contrast information received from different managers. On analyzing this information, it will be possible to reveal the current trends in the financial and marketing position of the company, the internal atmosphere within the company and, in a way, to foresee the further development of the company in the short-run perspective. The computation should be applied when auditors are working with accounting data and financial statistics of the company. In this regard, auditors should be particularly concerned with the accuracy of the information they have collected and the information they have received from accounting and financial statement of the company. Finally, the external confirmation is worth applying when the relationship of the company with its business partners and customers is assessed. In this regard, it is possible to use the comparison of the current position and financial statement of Tuffbuild Limited to its competitors that can reveal the extent to which the current marketing and financial performance of the company is successful. In fact, carrying out the auditing test is essential to assure the reliability and validity of auditing results. In the contemporary business environment and auditing, it is impossible to ignore the auditing test because such an approach to auditing can undermine outcomes of auditing and put under a question the reliability of the results and conclusions made by auditors. At the same time, the application of the auditing test should be carefully planned and carried out effectively.
In actuality, the materiality is extremely important in the context of auditing of the Tuffbuild Limited as well as any other company. In fact, materiality comprises the major part of assets of the company and auditors should view materiality as the basis for the analysis and assessment of the current position of the company. It is due to materiality it is possible to assess the actual, objective position of the company because it provides accurate information on the companyâ€™s assets and material basis for the further development of the company. Hence, materiality cannot be ignored by auditors.