Principal provides capital and hires agent to manage

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Principal provides capital and hires agent to manage it Agent hires auditor to report on the fairness of agent’s financial reports. Agent pays auditor to reduce principal’s information risk Auditor gathers evidence to evaluate fairness of agent’s financial reports. Auditor issues audit opinion to accompany agent’s financial reports, adding credibility to the reports and reducing principal’s information risk. Agent is accountable to principal: provides financial reports Information asymmetry and conflicts of interest lead to information risk for the principal
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Auditing A systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and establish criteria and communicating the results to interested users. Auditing should be done by a competent and independent person . JMS Feb 2018 Acc 3531 audit fundamentals
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Auditing Systematic process - There should be a well-planned and thorough approach for conducting an audit. Accumulating and evaluating evidence - evidence: any information used by the auditor to
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