Question

You are in a reunion of high school classmates. There is much food, and the drinks flow freely. Many of your classmates join the sciences and engineering fields; some have become doctors, others are lawyers, and still other are entrepreneurs. You alone joined the accountancy profession. Consider the following: 1. Gelai, a classmate since grade school (now a doctor) commended on your line of work: " I don't know anything about how an auditor perform his/her work. It seems that there is no scientific approach to the process." She continued, "all I know is that you auditors are on the lookout for fraud...other auditors prepare income tax returns for us professionals." 2. Lotlot, one of your teammates in spelling competition, is now a high-school teacher. She says, "audits? It's not surprising that you became an accountant...auditor...whatever. With all your talents in mathematics..." 3. Owell is now a lawyer. He was the class salutatorian, and has a very competitive nature. He heard Lotlot's remarks and said, "My friend,as class valedictorian you should have joined a more useful profession! Look at me. I serve the public. Look at you... audits? Bah! They are NOT productive. An audit has nothing to do with GNP or the public interest. Rather than create value, auditors like you simply check on someone what someone else has done." Requirement: Each situation illustrates a common misconception about accountants and auditor. Prepare a proper reply to each classmate.

Answer 1

Answer to first question : Audit is an independent examination of books of accounts

Audit can be performed by account professionals

Chartered accountants can only be auditors of the company

To form the opinion, the auditor gathers appropriate and sufficient evidence and observes, tests, compares and confirms until gaining reasonable assurance. The auditor then forms an opinion of whether the financial statements are free of material misstatement, whether due to fraud or error.

It's is not correct to say that audit has no scientific approach

Audit and science are related and has great connection

The scientific method is a widely used technique for the determination of a cause of an event. This method can be used in scientific inquiries as well as business analysis (the process of auditing a firm would be an example) to determine its characteristics. There is a step by step process in the scientific method which allows us to initially develop an hypothesis concerning an event and then to test that hypothesis to determine if we can disprove it and thus must look in another direction for a solution to the issue at hand. In our testing of the hypothesis we must always remember that the hypothesis cannot be proved only that we do not have sufficient information to disprove it. The scientific method consists of the following steps:

a. Ask a question concerning the issue.b. Do background research in relationship to the issue to get a more in-depth understanding of the situation.

c. Construct a Hypothesis concerning the issue which we will use to test our data against.

d. Test your Hypothesis by doing experiments of the population we are focused on.

Answer to question 2.

Undoubtedly you need great knowledge of maths in almost every field

However more qualities an accountant should poses is

Tactful mind

Alertness

Great accounting knowledge

Great taxation knowledge

Good amount of overall knowledge

Technical understanding

Good communication skills

Answer to question 3

Lawyer is a noble profession and it helps and works in the favor of public interest but that does not mean accountancy and auditing are not in public interest

Auditing has its sole purpose to provide true and fair view of books of accounts to the shareholders who are the normal human public

The common man who has invested his hard earned money into the company

Auditor provides the correct report of the company where the company stands what did the company do with the people's money

And how are they functioning

They provide correct picture of the books of accounts of the company