Fact – Definition
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A transnational audit is an audit of financial statements that are relied upon outside the audited entity’s home country. soaac.com+2aCOWtancy+2
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Often involves international groups and is associated with the Forum of Firms, an association of international networks that perform transnational audits. IFAC+2HLB+2
Elaboration
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Usually involves:
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Multinational companies with subsidiaries in many countries;
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Different accounting standards, tax rules and regulations;
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Coordination among audit teams in different jurisdictions.
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Transnational auditors must ensure consistent audit quality worldwide, following International Standards on Auditing (ISA) and strong quality control. IFAC+2HLB+2
Example
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A Malaysian company listed in London has subsidiaries in Singapore, Vietnam and Germany.
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Group auditor in London relies on component auditors in each country.
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This is a transnational audit because the financial statements are used by investors in many countries, not only in the home country.
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The network firm must have global policies, consistent audit methodology, and good communication.
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