Nature of an audit
For the financial markets to be efficient they need trust.
FAU syllabus
Nature of an audit 1 / 9
Nature of an audit
For the financial markets to be efficient they need trust.
How to build trust
The investors need to believe that the financial statements (FS) of companies are true and fair (free from errors).
How to build trust
The investors need to believe that the financial statements (FS) of companies are true and fair (free from errors).
How to build trust
This assurance is provided by external accountants (auditors) that audit (check) the FS of companies.
How to build trust
This assurance is provided by external accountants (auditors) that audit (check) the FS of companies.
How to build trust
Auditors need to be INDEPENDENT and they work in the best interest of shareholders rather than the companies being audited
How to build trust
Auditors need to be INDEPENDENT and they work in the best interest of shareholders rather than the companies being audited
Remember...
Owners
The company is owned by the owner (shareholders).
Remember...
Owners
The company is owned by the owner (shareholders).
Remember...
Managers
The managers manage the company and prepare the FS for the owner.
Remember...
Managers
The managers manage the company and prepare the FS for the owner.
Remember...
Auditors
The Auditors are apponted by the owner and make sure that the FS are free from the material misstatement.
Remember...
Auditors
The Auditors are apponted by the owner and make sure that the FS are free from the material misstatement.