Roles, duties and responsibilities of an Auditor

					                    Roles, duties and responsibilities of Auditors


Auditing means the evaluation of a person, organization, system, process, enterprise,
project or product. Audits are performed for the following reasons:

    To determine the validity and reliability of information
    To provide an assessment of a system's internal control.

The goal of an audit is to express opinion on the person / organization / system in
question, under evaluation based on work done. Due to practical constraints, an audit
seeks to provide only reasonable assurance that the statements are free from material
error. Hence, statistical sampling is often adopted in audits.

In the case of financial audits, a set of financial statements are said to be true and fair
when they are free of material misstatements - a concept influenced by both
quantitative and qualitative factors.

Audit is a vital part of Accounting. Traditionally, audits were mainly associated with
gaining information about financial systems and the financial records of a company or a
business. However, recent auditing has begun to include other information about the
system, such as information about security risks, information systems performance
(beyond financial systems), and environmental performance. As a result, there are now
professions conducting security audits, IS audits, and environmental audits.

In financial accounting, an audit is an independent assessment of the fairness by which a
company's financial statements are presented by its management. It is performed by
competent, independent and objective person(s) known as auditors or accountants,
who then issue an auditor's report based on the results of the audit. Such systems must
adhere to generally accepted standards set by governing bodies regulating businesses.
These standards provide assurance for third parties or external users that such
statements present a company's financial condition and results of operations.

The ICAI defines Auditing (AAS-1) as: "Auditing is the independent examination of
financial information of any entity, whether profit oriented or not and irrespective of its
size or legal form, when such an examination is conducted with a view to expressing an
opinion thereon"

Top auditing firms in the world

The Big Four are the four largest international accountancy and professional services
firms, which handle the vast majority of audits for publicly traded companies as well as
many private companies, creating an oligopoly over the auditing industry. The Big Four
firms are shown below, with their latest publicly available data:

            Firm                         Revenues Employees Fiscal Year

            PricewaterhouseCoopers $26.2bn          163,000         2009

            Deloitte Touche Tohmatsu $26.1bn        169,000         2009

            Ernst & Young                $21.4bn    144,441         2009

            KPMG                         $22.7bn    135,000         2008

This group was once known as the "Big Eight", and was reduced to the "Big Five" by a
series of mergers. The Big Five became the Big Four after the downfall of Arthur
Andersen in 2002, following its involvement in the Enron Scandal.

None of the Big Four accounting firms is a single firm. Each is a network of firms, owned
and managed independently, which have entered into agreements with other member
firms in the network to share a common name, brand and quality standards. Each
network has established an entity to co-ordinate the activities of the network. In two
cases (KPMG and Deloitte Touche Tomatsu), the co-ordinating entity is Swiss, and in
two cases (PricewaterhouseCoopers and Ernst & Young) the co-ordinating entity is a UK
limited company. Those entities do not themselves practice accountancy, and do not
own or control the member firms.

In most cases each member firm practices in a single country, and is structured to
comply with the regulatory environment in that country. However, in 2007 KPMG
announced a merger of four member firms (in the United Kingdom, Germany,
Switzerland and Liechtenstein) to form a single firm.
The next two largest firms to set high-quality accounting standards are the Grant
Thornton and BDO Seidman.

BDO international, as an auditing firm


BDO’s distinctive reputation for client proximity is built upon its commitment to all its
stakeholders that what matters to them matters to it. Its clients recognise it as their preferred
adviser, appreciating its seamless service worldwide.

Its story is one of continuously responding to ever changing client needs.

It was founded in 1963 when firms from the UK, Netherlands, Germany, US and Canada
joined forces to share and expand their knowledge to better support clients. It was known as
Binder Seidman International Group until 1973, when it adopted the name Binder Dijker Otte
& Co: BDO.

It continued to build its international capabilities, growing the strong local roots that mean it
now provides services to its clients in 110 countries. In 1988, it established a worldwide
structure and the BDO acronym was placed before each local member firm’s name. This,
together with the introduction of a new logo and a consistent global brand, clearly
demonstrated that the local expertise of its member firms was combined with the
international expertise and strength of its international network.

Since then, its network has continued to transform in response to client needs, culminating in
the change of its name in 2009 to simply BDO. Its move to a single global trading name
demonstrates its commitment to service its clients and to compete successfully in its market
on a multinational basis.

BDO is the world’s fifth largest accounting network. It has an excellent partner to staff ratio,
with 44,000 people working with its clients and offering challenging, ethical and practical
advice from 1,095 offices in 110 countries.

Its commitment to knowledge and best practice sharing means that expertise is easily shared
across the network. Its common methodologies and IT platform ensure effective and efficient
service delivery to all its clients. To maintain standards it has a robust accreditation process
and quality assurance review procedure.

It remains focused on helping its clients navigate ever-changing economic and market
conditions by providing high quality advice and service to all its clients on a consistent basis.
This will enable it to achieve its ambition to significantly increase its market share and ensure
that it is recognised in the market as a unified global network.

BDO International is a worldwide network of public accountancy firms, called BDO
Member Firms, serving international clients. Each BDO Member Firm is an independent
legal entity in its own country. The network, originally formed in 1963, is coordinated
by BDO Global Coordination B.V., with an office in Brussels, Belgium. The name, first
devised in 1973, is an acronym of Binder Dijker Otte & Co.

As at 30 September 2008, 100 BDO Member Firms in 110 countries employed 44,000
professionals in 1,095 offices throughout the world.

Global fee income of all BDO Member Firms for the year ending 30 September 2008
totalled € 3,649 million (US$ 5,145 million), making BDO International the fifth largest
accounting firm network globally.

The largest member firms are:

   Australia - BDO Kendalls                        Russia - BDO Unicon

   Belgium - BDO Atrio                             Ireland - BDO Simpson Xavier

   Germany       -     BDO       Deutsche          Hong Kong - BDO Limited
                                                   India - BDO Haribhakti & Co.
   Netherlands - BDO CampsObers
                                                   Denmark - BDO ScanRevision
   New Zealand - BDO Spicers
                                                   Switzerland - BDO Visura
   Norway - BDO Noraudit & Co.
                                                   Sweden - BDO Nordic
   Canada - BDO Dunwoody LLP
                                                   Spain - BDO Audiberia
   United    Kingdom     -    BDO    Stoy
                                                   Turkey - BDO Denet
   Hayward LLP
                                                   Israel - Ziv Haft
   United States - BDO Seidman, LLP
                                                   Philippines - BDO Alba Romeo & Co.

Services provided:

Audit and accounting services:

       Obtaining an understanding of the business being audited from an internal and
       external point of view.
       Assessing the risk of material misstatements, and the controls in place to prevent
       these risks.

       Choosing appropriate procedures to obtain evidence of the significant financial
       statement assertions.

       Ensuring rigorous quality control over audit performance.


Each BDO Member Firm has appointed tax specialists who contribute to and can draw
upon our network’s expertise in order to assist clients with cross-border transactions.
We are structured to give you quicker access to senior professionals who will give you
straightforward practical and technical advice.

BDO Member Firms provide a range of services to meet the domestic and international
tax needs of their clients around the world and offer advice in areas including:

       Business planning

       Mergers & acquisitions

       Transfer pricing

       Shareholder and owner-manager tax planning

       Employee benefit consulting

       Government incentives

       Commodity tax consulting

       Assistance in dealing with tax authorities

       Inward and outward investment

       Relocating executives

       Cross-border estate tax planning

       International real estate development
       Repatriation of profits and cash

       Minimisation of tax on passive income flows

       Customs duty planning

       Tax-efficient international structures

       Corporate and personal taxation

       Value added and sales taxes.

       Advice on Research & Development tax credits and incentives.


Various advisory services are provided such as:

    Business advisory

No matter what stage of the lifecycle your business is at, you will always need to make
sure that the right decisions are being made at the right time. This can only happen with
planning and strategy.

Our business advisory experts ensure your business’ success by driving growth, value
and profitability. Across the globe, our Member Firms have access to best practice
methods to help you meet your entrepreneurial ambitions, whether they be at home or

You will find that many BDO Member Firms around the world are the leading advisers
to growing businesses and the people who run them. We focus on ways to optimise
profitability now, whilst partnering you to plan and implement strategies for the future,
in areas including:

       Preparation of statutory financial statements

       Tax compliance, preparation and completion

       Cash flows, budgets and financial projections

       Business and ownership structures
   Trusts, asset protection and estate planning

   Family business counseling

   Management reporting

   Strategic planning

   Working capital management

   Business development

   Business planning

   Outsourced accounting

 Business Restructuring:

Many businesses experience periods of underperformance, in whole or in
part. At these times, a knowledgeable business partner is needed to give
clear,          commercial            and           pragmatic           advice.
BDO business restructuring teams around the world draw upon a global
knowledge base of expertise and tailor it to ensure the solutions are local to
your needs, in your market.

No matter where a business is in its life cycle, or your association with it, we
offer a range of services to help:

   -     Working   capital    management,     P&L    analytics,   performance
   improvement, project management

   - Financial intermediation, business planning, financial modeling,
   performance monitoring, refinancing

   Distress                            debt                            advisory
   - Intensive cash management, debt and equity restructuring, distress
   M&A, contingency planning, crisis management

   Optimum            exits      (including        insolvency           options)
   - Solvent exits, orderly closures, formal appointments, cross-border
   insolvencies, tax-driven restructuring

   Creditor-initiated                                                 procedures
   - Creditor services, compulsory liquidations, personal insolvencies
   (including bankruptcies)

Our teams regularly work across borders to ensure we provide a solution
that is right for the circumstances involved. All of our BDO regions have their
own areas of sector expertise, ensuring that we keep ahead of market
developments, no matter how many different jurisdictions are involved. Our
clients benefit from the assurance that all BDO teams work from the same
principle of sharing best practice methodology: attention to detail and high
levels of partner contact are standard in the BDO service offering.

 Corporate Finance:

Around the world, our corporate finance experts work together with businesses to
maximise their value through advising on acquisitions, fund raisings, flotations and

A typical BDO corporate finance client is either a business with trans-national
capabilities or ambitions, or a private equity firm with their niche in the middle
market. Partnering our clients for mutual success is what we do, and we do it in a
way that challenges the standard approach of other accountancy networks in the
market. Here’s why:

   We have national and international cross-service teams, providing clients with a
   one-stop resource for any accounting, taxation or strategic issues that may arise
   in the scope of the transaction we undertake.

   We have an approach which ensures that the best practices across our network
   are shared with each Member Firm. High levels of partner contact, an
   experienced team behind them and consistently unified service delivery means
   that no matter how many jurisdictions the transaction covers, the service will be

   With over 600 offices around the world, you will find that wherever the
   transaction is taking place, we have someone on the ground who works from a
   global knowledge base but also knows how to combine this with the conditions
   of the local market, ensuring an approach and a solution that meets the
   objectives of the client.

Our service offering is large and varied:


   Buying a business / selling a business

   Listing on the UK’s Alternative Investment Market

   Private Finance Initiatives and Public Private Partnerships

   Mergers and Acquisitions

   Due Diligence

   Raising equity

Our credentials speak for themselves:

   Our UK Member Firm has acted as lead adviser on more AIM flotations than any
   other UK accountancy firm for the last two years

   Our UK Member Firm won the coveted Financial Adviser of the Year award
   (BVCA/Real Deals) and also picked up Best Managed Firm at the European
   Practice Management awards in 2005.

 Forensic Accounting

A complex area such as forensic accounting means that you need effective, quality
service                        from                    the                   outset.
Regardless of what you think you may have uncovered, we can partner you to work
through the findings and ensure integrity remains paramount throughout the

BDO's forensic accounting experts across the globe have an approach to client
contact that sees the best practices of the network rise to become the accepted
practice. You can be assured that wherever you need assistance, there will be
someone from BDO on the ground to help you through.

We specialise in the following service offerings:

   Expert witness and dispute advisory

   Alternative Dispute Resolution

   Fraud investigations

   Anti-money laundering

   Digital forensics

   Matrimonial disputes

   Tax investigations

 Risk Advisory:

The BDO approach to risk assurance provides a challenging mix of talent, experience
and determination to find the best solution for you and your firm.
Our Risk Advisory experts in more than 600 offices across the world apply a best
practice approach to quality and service delivery. This ensures that you benefit from
a group with local knowledge at the fore, but who is also switched on to global
developments and trends:

   Regulatory & Compliance Services

   Internal Audit Services

   Technology Risk & Security

   Business Process Enhancement
    Through commitment to local knowledge in the context of a global marketplace, we
    are able to give you value-added risk management capabilities to mitigate business
    risk, support business strategy and continuously improve operational performance.


Regulatory Compliance
BDO is sensitive to the needs of companies that must comply with requirements of national and
international regulators, including capital market regulators such as the U.S. Securities and Exchange
Commission (SEC), as well as the pronouncements of accounting standard-setters, such as the Financial
Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).

Its partners and staff take part in regular training, and its national assurance, accounting, and SEC
leadership teams are active in professional and technical committees. BDO expresses its views and
perspectives through these committees and through comment letters to the SEC, FASB and other
regulators and standard-setters.

The rigorous training and participation in professional activities enable it to take a proactive role in working
with its clients to help them remain abreast of today’s ever-changing rules. It can assist with technical
training and presentations to management and audit committees, in addition to working meetings to
consider implementation approaches and timetables.

BDO International is governed by the BDO Council and the BDO Policy Board. The
International Executive Office, located in Brussels, is responsible for the implementation of
policy and the day to day coordination of the network. The Council comprises one
representative from each Member Firm. The Council approves budgets and financial
matters, appoints the Policy Board and approves any changes to the Member Firm

The Policy Board comprises a representative of the network’s five largest Member Firms
whose appointment, for a three year term, is approved by the Council. The CEO of BDO
International also attends meetings of the Policy Board. The Policy Board sets policies and
priorities for the network and oversees the work of the Chief Executive and the International
Executive Office. The Policy Board meets at least four times a year and more often if

The BDO International Executive Office, managed by the CEO of BDO International, is
tasked with coordinating the activities of the network. It does not provide any professional
services: this is the sole preserve of the Member Firms. A Global Leadership Team was
appointed on 1 January 2009 to assist the CEO and comprises the CEO, Global Head of
Audit & Accounting, Global Head of Tax, Global Head of Client Service, Global Head of
People and the International Secretary.

Neither BDO Global Coordination BV nor any of the Member Firms are responsible for each
other’s acts and omissions. Each BDO Member Firm is an independent legal entity in its own
Forum of Firms
The Forum of Firms is an association of international networks of accounting firms that
perform audits of financial statements that are or may be used across national borders. The
Forum’s goal is to promote consistent and high quality standards of financial reporting and
auditing practices world wide. In January 2008, BDO International was named one of the first
full members of the Forum of Firms, after reporting it had implemented a globally
coordinated quality assurance programme, committed to the use of International Standards
on Auditing (ISAs), and met other specific ethics requirements. BDO is one of the
international networks of accounting firms that achieved full member status, the first group of
firms to do so since the Forum was formally established in 2002. Being officially recognised
as a Member of the Forum of Firms is proof that BDO has embraced the high quality
assurance and ethics standards required of Forum members in order to serve the public
interest and to help raise the standards of the international practice of auditing.


Financial audits exist to add credibility to the implied assertion by an organization's
management that its financial statements fairly represent the organization's position
and performance to the firm's stakeholders (interested parties). The principal
stakeholders of a company are typically its shareholders, but other parties such as tax
authorities, banks, regulators, suppliers, customers and employees may also have an
interest in ensuring that the financial statements are accurate.

The audit is designed to reduce the possibility that a material misstatement is not
detected by audit procedures. A misstatement is defined as false or missing information,
whether caused by fraud (including deliberate misstatement) or error. "Material" is
very broadly defined as being large enough or important enough to cause stakeholders
to alter their decisions.

Audits exist because they add value through easing the cost of information asymmetry,
not because they are required by law. For example, a privately-held company that does
not issue securities on a public exchange might engage a firm to audit its financial
statements in order to obtain more desirable loan terms from a financial institution or
trade accounts with its customers. Without the audit, the lending party would not have
assurance as to whether or not the company's financial position is accurate. In turn, the
lender could price protect against this information asymmetry.

The exact form and content of the "audit opinion" will vary between countries, firms
and audited organizations.
In the US, the CPA firm provides written assurance that financial reports are "fairly
presented in conformity with generally accepted accounting principles (GAAP)." The
measure for "fairly presented" is that there is less than 5% chance (5% audit risk) that
the financial statements are "materially misstated."

BDO International supports Member Firms in the delivery of consistently high quality
services. The International Executive Office provides guidance on the design and
implementation of quality control systems to support compliance with both local and
international standards. In accordance with the International Standard on Quality Control
(ISQC- 1), Member Firms have their own systems of quality control.

BDO International evaluates the quality of local and referred professional work carried out by
BDO Member Firms through a Quality Assurance Review process. These reviews aim to
provide assurance that BDO Member Firms are adhering both to applicable professional
standards and BDO International standards.

Many Member Firms are also subject to external inspections by local professional institutes,
local regulators or subject to a peer review. A process for accreditation of Member Firms
was introduced for the first time this year. This was a challenging and robust process to seek
to monitor and enhance the quality of Member Firms in respect of the performance,
compliance, quality and risk management and competencies and capabilities of each firm.
As a result of this process improvement plans have been or are being implemented by
various Member Firms. The accreditation criteria will be reviewed for 2009 to enhance our
focus on quality within firms and in order to support the key strategic aims of the network.

Duties and Responsibilities:

With rapid changes in business and the regulatory environment, companies face new and increasing
challenges, risks and burdens. BDO provides a hands-on service constantly interacting with its clients'
management. It strives to deliver efficient, effective and comprehensive assurance services without
losing the personal touch.

Its risk-based audit approach focuses on business drivers, the associated risks and potential effects
on the financial statements.

Its BDO audit approach is applied consistently across our international network through the use of the
BDO Audit Manual, which complies fully with International Standards on Auditing while adding
supplementary guidance to address local statutory requirements. This sound audit methodology,
together with its commitment to quality service, ensures that its audit work is conducted effectively
and efficiently.

Its professionals' expertise is highly-diversified. This enables it to carry out audits on financial
statements prepared under International Financial Reporting Standards (IFRS) and under generally
accepted accounting standards in Hong Kong, China, USA, U.K. and other major jurisdictions.

BDO as an accounting network leverages local knowledge with international reach. As is evident by
the use of a local firm name in conjunction with the acronym of BDO, it values the local knowledge,
the local networking and the personal touch. This allows it to deliver, at each location, cohesive
service, nimble and responsive, without a bureaucratic overlay yet with all the checks and balances to
ensure that its clients are provided with high level of technical expertise.
BDO member firms are connected seamlessly through the BDO secure intranet E-connect, which
allows it to communicate and share knowledge and best practices with other professionals located
around the world.

Its well-established electronic platform enables it to effectively coordinate with the respective local
offices and to centralise reporting at the office or country of client's preference.

Its directors invest significant time in developing strong relationships with the clients' management
team and are ready to provide proactive support throughout the year.

The scope of its audits extends far beyond number crunching. It adds value by looking at the facts
behind the numbers and providing recommendations on its clients' operational and internal control
procedures based on its findings.

Latest updates:

New audit tool development

In 2008 BDO revised its international audit methodology and made considerable progress in
the development of a related audit tool by working closely with Qurius NV, a leading Dutch
software solution provider. The development of the new tool represents a significant project
intended to benefit the entire network. Execution of the project is being carried out by teams
comprising representatives from a number of BDO Member Firms that will address the IT
infrastructure, testing, and deployment of the revised audit methodology using the new tool
throughout the network, supported by a robust training programme. This constitutes a
considerable financial investment by BDO International and is an excellent example of the
way the Member Firms collaborate to enhance the overall professional service offering to
clients of the network. The new methodology and audit tool are intended to be used
efficiently and effectively on all audit clients served by our Member Firms in 2010. The new
audit tool will represent a high quality, leading edge technology which is expected to
enhance the current audit processes for all our clients.


Proximity to clients
Throughout BDO, client proximity is fundamental to the success of the network. This means
that all BDO Member Firms must ensure the best possible experience for all their clients,
across the world. BDO achieves this by:
• Delivering a first class professional service
• Exercising strong professional judgement
• Being straightforward in approach
• Providing guidance for the sustainable development of our clients’ businesses
• Acting with honesty and integrity
• Sharing information within the network
• Investing in a robust international quality control process
• Striving for continuous improvement.
BDO is currently developing a single market position to be adopted by all BDO Member
Firms. This will enable BDO to be more clearly positioned as a leading international brand
with a distinctive reputation for delivering a consistently high quality service on a global
basis. This will drive growth, improve network stability, give BDO positive differentiation from
the competition and assist all Member Firms in servicing larger and more diverse clients.

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