Communicating the resultsThis is often referred to as attestation. The final stage in the audit process is the audit report– the communication of the findings to users. By attesting to the degree of correspondence with established criteria. Byattesting to the degree of correspondence with established criteria, the investigator enhances (or weakens) the credibility of therepresentations or claims that have been made by another party. The communicationof findings is achieved through a written report.Interested usersThese are individuals who use (rely on) the auditor’s findings. In a business environment, this includes stockholders, 1
management, creditors, governmental agencies, and the public.The IFAC Education Committee defines auditing as follows:“Auditing is a structured process that:•involves the application of analytical skills,professional judgment, and professional skepticism;•is usually performed by a team of professionals, directed with managerial skills;•uses appropriate forms of technology and adheres to a methodology;•complies with all relevant technical standards, such as International Standardson Auditing (ISAs), International Standardson quality Control (ISQCs), International Financial Reporting Standards (IFRS), International Public Sector Accounting Standards (IPSAS), and any applicable international, national or local equivalentsas appropriate; and•complies with required standards or professional ethics.”Objective of AuditingWhy Independent Auditing is Necessary As society becomes more complex, there is an increased likelihood that unreliable information will be provided to decision makers referred to as “Information Risk”. Some of the factors that contribute to information risk are:•Remoteness of information users from information providers•Potential bias and motives of information provider•Voluminous data•Complex exchange transactions–Remoteness of information users from information providersDecision makers, almost always, do not get first hand knowledge about the business enterprise with which they do business for the reasons that in many cases,1. owners are divorced from management2. directors are not divorced in day-to-day operations or decisions3. business may be dispersed among numerous geographic locations and complex structurePotential bias and motives of information providerA conflict of interest may be assumed to exist between management and owners regarding the financial statements. Management usually desires to present the results of its stewardship in the most favorable light. Information may possibly be biased in favor of the provider when his goals are inconsistent with the decision maker. This could be attributed to either an international emphasis designed to influence users in a certain manner or maybe an honest optimism about future events.
- Summer '15