Lockhat Incorporated offers a range of financial services geared at making us a versatile, professional and effective firm to work with. Please select the area of interest from the list below
AUDIT AND RISK ADVISORY SERVICES OVERVIEW
The impact of new technology and the need to respond ever more rapidly to change is affecting the way organizations conduct business. Our Audit and Attestation Services practice is a dynamic one, adapting to meet new requirements, which may include new risks such as intellectual property, alliances, brand values, e-business and social responsibility, in a virtual and increasingly transparent environment. Whatever the situation, decisions continue to be based on the quality and integrity of organizations’ financial statements and on assurances given by qualified third parties.
With the rapid and dramatically changing environment taking place in today’s business world, come new and complex risks. Digesting these risks and how they are reflected in an organization’s financial performance is the role of our audit process. Attestation Services are those that provide an opinion given by Lockhat Incorporated and include financial statement audits and reporting to regulatory authorities and other third parties.
USE OF INFORMATION TECHNOLOGY
Our audit teams are equipped with computer applications designed to ensure a quality audit. Our technology tools provide our teams with a structured, risk-focused workflow that puts industry information at their fingertips, and enhances team collaboration. These tools include electronic work-papers and computer based database auditing software which help teams focus on the key risks of your business and drive concise analysis that is fundamental to the financial statement audit.
View the comprehensive list of services that we offer at Lockhat Incorporated.
Audits are recommended for all entities having an annual turnover of R30 000 000 (Thirty Million Rands) or a staff complement of 35 staff.
In terms of the Companies Act of 2008, only certain companies and close corporations are required to be audited in terms of the Public Interest Score as defined. Some other entities may also be required to undergo an audit due to their constitution, trust deed, banking requirements or other legislation. These include local governments, non profit agencies and other organisations receiving government grants.
Moreover, some financial institutions require audits of companies or close corporations based on the financing amount and/or the bank’s assessment of the company’s risk. Also, companies with absentee ownership (such as those owned by investment firms, or individuals who no longer run the business) may order audits as checks of their management teams.
Shareholders, creditors, bankers, financiers, management and other stakeholders often need assurance that the financial statements of an entity accurately represent the true financial position of a company.
These users of the financial statements often have different levels of risk tolerance. Generally, there are three main levels of assurance which we will be glad to further explain to you, should it appear confusing. We provide three levels of assurance to meet your requirements as follows:
Audit – Highest Level of Assurance
An audit provides the highest level of assurance. An audit is a methodical review and objective examination of the records (documented, electronic and visible) of an entity, including the verification of specific information as determined by the auditor or as established by general practice. An audit would include a review of internal controls, testing of selected transactions, and communication with third parties. Based on our findings, we issue a report on whether the financial statements are fairly stated and free of material misstatements.
An Audit allows you to…
- Satisfy stakeholders such as employees, customers, suppliers and pressure groups, as well as the investing community such as bankers and creditors, as to the credibility of published information.
- Check the payment of corporate tax, Value Added Tax, and other taxes accurately, thereby avoiding interest, penalties, and investigations.
- Comply with banking covenants.
- Help deter and detect material fraud and error.
- Facilitate the purchase and sale of businesses.
Here’s what you get…
The highest level of assurance because we obtain information from both inside and outside your entity. Typically, we’ll have written communication with:
- Your customers, to check outstanding receivable balances,
- Your banks, to confirm cash or debt balances and terms,
- Your vendors, to verify outstanding payable balances, and
- Your attorneys, for information on pending or threatened legal action.
We also perform physical inspections by observing your inventory counting methods and perform test counts. We document and test each operating cycle, including sales and cash receipts, expenses and cash disbursements, and payroll. Our audit papers include a detailed work program to document the examinations and testing performed, as well as the client’s supporting work papers.
Audits are recommended for all entities having an annual turnover of R30 000 000 (Thirty Million Rands) or a staff complement of 35 staff.
Which Report Should You Use? Each type of financial statement report may suit specific circumstances, depending on requirements from you, your bankers or other parties, as well as budgetary needs. Understanding each report’s unique strengths and weaknesses can help you choose the most appropriate one. Please contact any one of the partners to discuss which specific report best suits your business.
Compilation – Lowest Level of Assurance In compiling financial statements for a client, we present information that is the “representation of management” and expresses no opinion or assurance on the statements.
COMPUTER ASSISTED AUDITING TECHNIQUES
CAAT`s (Computer Assisted Auditing Techniques) addresses these problems. CAAT’s, as it is commonly called, is the practice of analysing large volumes of data, looking for anomalies. A well designed CAAT’s audit will not be a sample, but rather a complete review of each and every single transaction. Using CAAT’s, the auditor will extract every transaction the entity was party to, during the period reviewed.
We have just recently purchased a leading internationally recognised CAAT software tool and Mr Imraan Lockhat heads up the division, allowing us to perform this function. For example, using CAAT’s we can find possible fraud by comparing the banking details of your employees on your payroll database to all supplier banking details on your supplier banking database. Using this database comparison principle, we can search your entire database of inventory to identify every instance of overvalued stock at year end (which could substantially lower your taxation) ,duplications, unauthorised access to the database, masterfile amendments which were not authorised and many other unique transactions which simply cannot be done if your auditor is using conventional auditing sampling techniques. When a problem is identified, we can approach management with the knowledge that we tested 100% of the transactions and that we identified 100% of the exceptions.
Another advantage of CAAT’s is that it allows us to test for specific risks. For example, an insurance company may want to ensure that it doesn’t pay any claims after a policy is terminated. Using traditional audit techniques this risk would be very difficult to test. The auditor would “randomly select” a “statistically valid” sample of claims (usually 30-50.) They would then check to see if any of those claims were processed after a policy was terminated. Since the insurance company might process millions of claims the odds that any of those 30-50 “randomly selected” claims occurred after the policy was terminated is extremely unlikely.
Using CAATs we can select every claim that had a date of service after the policy termination date. The auditor can then determine if any claims were inappropriately paid. If they were, the auditor can then figure out why the controls to prevent this failed.
Benefits of audit software include:
- It is independent of the system being audited and will use a read-only copy of the file to avoid any corruption of an organisation’s data.
- Many audit-specific routines are used such as sampling.
- Provides documentation of each test performed in the software that can be used as documentation in the auditor’s work papers.
Audit specialised software can easily perform the following functions:
- Data queries
- Data stratification
- Sample extractions
- Missing sequence identification
- Statistical analysis
- Duplicate inquires
- Pivot tables
- Cross tabulation
The use of IT affects the fundamental manner in which transactions are initiated, recorded, processed, and reported. When an organisation utilises Information Systems effectively then such company’s control environment would have automated procedures implemented to initiate, record, process, and report critical financial transactions. In such scenarios, a company could potentially maintain electronic records and may replace such paper documents as purchase orders, invoices, shipping documents, and related accounting records.
Controls in systems that use IT, consist of a combination of automated controls (for example, controls embedded in computer programs) and manual controls. Further, manual controls may be independent of IT, may use information produced by IT, or may be limited to monitoring the effective functioning of IT and of automated controls, and to handling exceptions. An entity’s mix of manual and automated controls varies with the nature and complexity of the entity’s use of IT.
It is essential for the members of BoD, Executive Management, Internal Auditors and External Auditors to gain assurance over the integrity, accuracy, timeliness and completeness of the transactions that are processed within a complex environment.
Lockhat Incorporated understands the criticality of the financial reporting process from a transactional standpoint and also has the experience to decipher the underlying pervasive controls related to Information Technology.
Our services include performing various types of EDP / IT Audits, including:
- General IT Administration & Governance audits
- Application Development, Maintenance and Change Control audits
- Networks & Telecommunications controls audits
- Operating Systems and Hardware Maintenance & Support audits
- Production Operations & End User Computing audits
If you are considering an IT Audit or any other specific Application Audits, give us a call so that one of our partners can provide you with trusted advice.
Traditionally, auditors are often criticised because they reach conclusions based upon limited samples.
A review doesn’t require us to study and evaluate your company’s internal controls or verify data with third parties or physically inspect assets. Rather, a review report expresses limited assurance in the form of the statement: “We are not aware of any material modifications” for the financial statements to be in conformity with the International Financial Reporting Standards (IFRS). Reviewed Financial Statements include all required notes and other disclosures. Why might a business request a review engagement? It can be a good middle ground, providing the advantages of a Registered Auditor’s technical expertise without the work and expense of an audit.
Review – Limited Assurance Less extensive than an audit, but more involved than a compilation, a review engagement consists primarily of analytical procedures we apply to the financial statements, and various enquiries we make of your company’s management team.
VALUE ADDED AUDITING
An auditor should provide business value-not drain the bottom line. At Lockhat Incorporated, our audit practice revolves around saving our clients money and unlocking potential opportunities. Most business owners prefer to focus on operations, opportunities and the information they need to get ahead-not on formal financial statements with footnotes and reactionary advice. We aim to be proactive about your business, helping you to run your business better and solve problems before they arise. Our experts will work directly with the business owner or financial manager to help unlock your company’s full potential.
- Financial Statement Audits
- Forensic Audits (we work in conjunction with attorneys)
- IT General Controls Audits
- Agreed Upon Procedures Audit Engagements
- Attorneys Trust Account Audits
- Estate Agents Trust Account Audits
- Investigatory Audits
- Computer Operating System Audits
- IT Governance and Network Vulnerability Reviews
- Tax Audits, SARS queries up to and including litigation level
An auditor should provide business value-not drain the bottom line. At Lockhat Incorporated, our audit practice revolves around saving our clients money and unlocking potential opportunities.
DUE DILIGENCE PROCEDURES
Due diligence is used commonly when buying a business, as the buyer engages his auditors to go through the financial situation of the business, legal obligations, customer records, and other documents to give the buyer peace of mind or warn of potential pitfalls.
We almost always advise our clients to perform a due diligence when investing a material amount of money. If you don’t perform a “due diligence” in a business situation, you may end up buying something that isn’t as you thought it was, or you may end up in a business relationship that will cause you trouble. It can be costly to perform a due diligence, because it involves professional time of a Chartered Accountant (and sometimes attorneys), but we believe it`s certainly worth the trouble.
Due Diligence is the process of investigating and auditing a prospective business decision by gathering information about the financial, legal, and other material (important) status of an entity and the issue of a report on findings.
Lockhat Incorporated, through Coastal Accounting and its partners, is also competent to refer the following services, should the need arise out of matters uncovered in our audit.
Lockhat Incorporated, being highly skilled and experienced financial professionals, are competent to provide non audit services through our specified partner of choice – Coastal Accounting
Through our exclusive partnership with Coastal Accounting we are able to offer an array of specialised financial services which include comprehensive accounting, business consulting and other non assurance services.
Each firm retains its own professional image and identity but the partners of both firms often work very closely with each other to ensure that an all encompassing solution is identified when dealing with intricate financial problems.