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qualified 
(or modified)
 report
, setting out the matter(s) on 
which they disagree with the management. 
The financial statements to which the auditors refer in their report comprise the following. 

The profit or loss account (sometimes referred to as the income statement) 

The statement of financial position (formerly called the balance sheet) 

The statement of cash flows (formerly called the cash flow statement) 

Supporting 
notes 
The auditors' report is included as part of the company's published accounts. It is addressed to the 
members of the company (not to the management). 
2.4.1 Internal audit 
Internal auditors are employees of the company whose duties are fixed by management
and who 
report on the effectiveness of internal control systems.
2.5 Other departments and sections 
Accounting management provides a good example of the 
need for close co-ordination
between 
managers and sections, and this need is particularly acute in financial accounts work because of the 
internal controls dividing up responsibilities
. 
Department 
Accounts section 
Relationship 
Purchases dept (PD)
Payables ledger 
(PL) 
Cashier (C) 
PD advises PL of purchase orders 
PD indicates valid invoices 
C informs PD and PL of payment 
Human resources dept
Payroll 
Personnel gives details of wage rates, starters and 
leavers to payroll 
Sales dept (SD) 
Credit control (CC)
Receivables ledger 
(RL) 
SD advises RL of sales order 
RL might give CC information about overdue debts 
RL might give details about debtors ageing and other 
reports 
Operations, inventory 
controllers
Cost accounting 
staff 
Operations might give details of movements of 
inventory, so that the accounts staff can value 
inventory and provide costing reports