Chief justice warren burger opined on the signicance

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Unformatted text preview: entity and its management. Again, this arrangement gives rise to a demand for the auditing of information produced by management. Practice INSIGHT At the heart of a capital-market economy is the free flow of reliable information, which investors, creditors, and regulators use to make informed decisions. Chief Justice Warren Burger opined on the significance of the audit function in a 1984 Supreme Court decision: By certifying the public reports that collectively depict a corporation’s financial status, the independent auditor assumes a public responsibility transcending any employment relationship with the client. The independent public accountant performing this special function owes ultimate allegiance to the corporation’s creditors and stockholders, as well as to the investing public. More than 25 years later, the message is the same—users of financial statements rely on the external auditor to act with honor and integrity in protecting the public interest. In summary, while laws and regulations account for some of the demand for auditing, they do not account for all of it. Auditing is demanded because it plays a valuable...
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