Question

You have recently graduated from your university and started work with an accounting firm. You meet an old school friend, Kim, for dinner—you haven’t seen each other for several years. Kim is surprised that you are now working as an auditor because your childhood dream was to be a ballet dancer. Unfortunately, your knees were damaged in a fall and you can no longer dance. The conversation turns to your work and Kim wants to know how you do your job. Kim cannot understand why an audit is not a guarantee the company will succeed. Kim also thinks that company managers will lie to you to protect themselves, and as an auditor you would have to assume that you cannot believe anything a company manager says to you.

Compose a letter to Kim explaining the concept of reasonable assurance, and how reasonable assurance is determined. Explain why an auditor cannot offer absolute assurance. Describe the concept of professional skepticism and how it is not the same as assuming that managers are always trying to deceive auditors. Explain to Kim why her perceptions are a perfect example of the expectations gap.

Answer 1

Auditor Job Duties:

• Ensures compliance with established internal control procedures by examining records, reports, operating practices, and documentation.
• Verifies assets and liabilities by comparing items to documentation.
• Completes audit workpapers by documenting audit tests and findings.
• Appraises adequacy of internal control systems by completing audit questionnaires.
• Maintains internal control systems by updating audit programs and questionnaires; recommending new policies and procedures.
• Communicates audit findings by preparing a final report; discussing findings with auditees.
• Complies with federal, state, and local security legal requirements by studying existing and new security legislation; enforcing adherence to requirements; advising management on needed actions.
• Prepares special audit and control reports by collecting, analyzing, and summarizing operating information and trends.
• Maintains professional and technical knowledge by attending educational workshops; reviewing professional publications; establishing personal networks; participating in professional societies.
• Contributes to team effort by accomplishing related results as needed.

Auditor Skills and Qualifications:

Audit, Legal Compliance, Documentation Skills, Attention to Detail, Reporting Research Results, Thoroughness, Presentation Skills, Financial Software, Corporate Finance, SFAS Rules, Objectivity