Independence is a bedrock principle for auditors. If an auditor is not independent of the client, users may lose confidence in the auditor's ability to report objectively and truthfully on the financial statements, and the auditor's work loses its value. From an agency perspective, if the principal (owner) knows that the auditor is not independent, the owner will not trust the auditor's work. Thus, the agent will not hire the auditor because the auditor's report will not be effective in reducing information risk from the perspective of the owner. 2-14 Audits can be categorized into five types: (1) financial statement audits, (2) audits of internal control, (3) compliance audits, (4) operational audits, and (5) forensic audits. a) Compliance audit performed by government auditor b) Financial statement audit performed by an external auditor.
c) The audit could be an internal control, compliance, and/or operational audit performed by an internal/ external auditor. d) Forensic audit performed by forensic auditor. e) Compliance audit performed by internal/ external auditor. f) Operational audit performed by internal/ external auditor. g) Compliance audit performed by government auditor. h) Forensic audit performed by forensic auditor.
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