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Auditing is the process of evaluating and analyzing a person, a system, an enterprise, a project, or an organization, in a bid to take account of certain resources. Audits are extremely beneficial in accounting; they are used to ascertain the reliability and validity of accounting information and to act as a way of assessing an organization’s internal control systems. Audits seek to give assurance that the financial statements of the organization or person under the audit are free of mistakes, and the information presented in the statements is correct and error-free (Cosserat and Rodda 2009, p112).
Traditionally, audits were mainly used to give information and reliable knowledge about the economic position of a financial system. However, auditors have recently begun including non financial reports in the audits (Kana 2008, p221). These include safety and the security of information systems and business environmental concerns. Auditors, as a result, should not have any financial interest in the firms they are chosen to audit. They should do their work devoid of any bias and come up with sincere and faithful reports regarding the audited books of accounting. While doing their job, they should follow the right procedure and work to ensure that they act in compliance with all the accounting rules and regulations, to come up with satisfactory results, which will prove their commitment to their job.
Auditors who fail to display their professionalism can be brought to action. This includes auditing firms where they have secret financial interests and committing other frauds of any kind while performing their duty (Gray and Manson 2007, p93). It is their responsibility to give a true report to the auditee, regarding the accounting books of the organization. Auditors who decide to forge information in accounting books to serve their own selfish interests can be brought into account, once proved. The auditee, in this case, should prove that their auditors made wrong reports intentionally. This means that the auditors may have intentionally hidden some sensitive information about the books, or introduced additional false statements to suit their interests. Auditors who are proved to be responsible for any intentional frauds can be brought to account.
Auditors are hired to act and serve the interest of the shareholders of an organization (Kana 2008, p228). They should, therefore, give them a firm assurance that their financial books are in their right state and that they have not been manipulated by the directors or any other person who holds responsibility for maintaining the financial books. Auditors who manipulate their reports will be acting in the interest of other parties, which may be possible proof that they are colliding with the management or, other unknown, people to commit fraud in the books of their auditees.
An auditor can also be brought to action for negligence (Cosserat and Rodda 2009, p117). This takes place when it is proved the said auditor did not comply with the relevant ISA during his duty, and that the procedure, he used for carrying out his audits was not complete or wrong. This means that the audit report will not serve its purpose since it will be below standards. Auditors are supposed to help identify any mistakes in accounting books and prove the validity of the information recorded in such books. An act of negligence means that the report will not serve its purpose (Gray and Manson, p109). Poor reports may mean that the accounting information that was audited may still have mistakes.
Auditors also have their rights of defense (Cosserat and Rodda 2009, p141). This is because they are human and they can commit mistakes to some acceptable level. It is hence vital for the auditee to carry out appropriate and intensive investigations. These will help to come up with sufficient evidence to prove that the auditor acted in his own interest. They will also help confirm that he intentionally committed frauds in their financial books to serve his selfish interest.
Reference List
Gray, M. I. and Manson, S., 2007. The Audit Process: Principles, Practice and Cases. London: Cengage Learning.
Kana, S., 2008. The Principles and Practice of Auditing. Cape Town: Junta and Company Limited.
Cosserat, W. G. and Rodda, N. M., 2009. Modern Auditing. New York: John Wiley & Sons’ publishing group.
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