What auditors do
The outside, independent auditor is engaged to render an opinion on whether a company’s financial statements are presented fairly, in all material respects, in accordance with financial reporting framework. The audit provides users such as lenders and investors with an enhanced degree of confidence in the financial statements. An audit conducted in accordance with GAASand relevant ethical requirements enables the auditor to form that opinion.
To form the opinion, the auditor gathers appropriate and sufficient evidence and observes, tests, compares and confirms until gaining reasonable assurance. The auditor then forms an opinion of whether the financial statements are free of material misstatement, whether due to fraud or error.
Some of the more important auditing procedures include:
✎ Inquiring of management and others to gain an understanding of the organization itself, its operations, financial reporting, and known fraud or error
✎ Evaluating and understanding the internal control system
✎ Performing analytical procedures on expected or unexpected variances in account balances or classes of transactions
✎ Testing documentation supporting account balances or classes of transactions
✎ Observing the physical inventory count
✎ Confirming accounts receivable and other accounts with a third party
At the completion of the audit, the auditor may also offer objective advice for improving financial reporting and internal controls to maximize a company’s performance and efficiency.
What auditors don’t do
For a clear picture of the role of external auditors, it helps to understand what you should not expect auditors to do. The emphasis is on “independent.”
First and foremost, auditors do not take responsibility for the financial statements on which they form an opinion. The responsibility for financial statement presentation lies squarely in the hands of the company being audited.
Auditors are not a part of management, which means the auditor
- See more at: http://www.grfcpa.com/resources/publications/auditor-responsibilities/#sthash.guiTYFz3.dpuf
What auditors do
The outside, independent auditor is engaged to render an opinion on whether a company’s financial statements are presented fairly, in all material respects, in accordance with financial reporting framework. The audit provides users such as lenders and investors with an enhanced degree of confidence in the financial statements. An audit conducted in accordance with GAASand relevant ethical requirements enables the auditor to form that opinion.
To form the opinion, the auditor gathers appropriate and sufficient evidence and observes, tests, compares and confirms until gaining reasonable assurance. The auditor then forms an opinion of whether the financial statements are free of material misstatement, whether due to fraud or error.
Some of the more important auditing procedures include:
✎ Inquiring of management and others to gain an understanding of the organization itself, its operations, financial reporting, and known fraud or error
✎ Evaluating and understanding the internal control system
✎ Performing analytical procedures on expected or unexpected variances in account balances or classes of transactions
✎ Testing documentation supporting account balances or classes of transactions
✎ Observing the physical inventory count
✎ Confirming accounts receivable and other accounts with a third party
At the completion of the audit, the auditor may also offer objective advice for improving financial reporting and internal controls to maximize a company’s performance and efficiency.
What auditors don’t do
For a clear picture of the role of external auditors, it helps to understand what you should not expect auditors to do. The emphasis is on “independent.”
First and foremost, auditors do not take responsibility for the financial statements on which they form an opinion. The responsibility for financial statement presentation lies squarely in the hands of the company being audited.
Auditors are not a part of management, which means the auditor
- See more at: http://www.grfcpa.com/resources/publications/auditor-responsibilities/#sthash.guiTYFz3.dpuf
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