Question

a.)In your opinion, who is the greatest beneficiary of the audit and why? (Examples may include investors, creditors, the company itself, potential employees, etc.)

b.)Can the quality of an audit always be assured? Why or why not? What might interfere with audit quality?

c.)Do you agree with the notion that there are factors outside of the auditor’s control that affect the quality of the auditor’s work, and why or why not? Is that acceptable? Should that be made clearer to investors or other users of audit reports?

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Answer 1

(a).

No doubt, investors are the greatest beneficiary of the audit because we know that audited financial statements provide true & fair information. So an investor will be more rely on the audited fianancial statements and investors will take reasonable decisions on the basis of true & fair accounting information of the financial statements henceit is true that investors are the greatest beneficiary of the audit. Although other stakeholders also got benefited from the audit but investors are the greatest beneficiary.

(b).

Quality of an audit always can not be assured because it is quite possible that auditors are unknown about some errors or fraud that is why we can not be assured completely about audited financial statements. Apart from this it is also possible that auditor is also involve in some fraud activities of business. So audit may not cover some important information that are very necessary thus it is true that quality of an audit always can not be assured.

(c).

Yes, it is quite possible that there are factors outside of the auditor’s control that affect the quality of the auditor’s work because auditor can not control everything. Some uncontrollable factors may affect quality of auditor’s work because auditor will not be in position to control these factors. Practically we see that auditors are trained & specialised in audit work and also hold professional code of conduct but it is also true that some factors can not be control by these auditors hence we can say that factors outside of the auditor’s control can affect the quality of the auditor’s work.

So if these factors are truly known to the management of the company and apex audit body then it is acceptable because we know that these factors are out of auditors’ control that is why managemnt of a firm & company will accept it.

Investors and other users of audit reports should be made clearer about such factors so that these stakeholders can take their decisions accordingly. If we do not inform investors and other users of audit reports then it will be unethical and violation thus it is required that managemnt of the company should timely inform various stakeholders.