Question

In: Accounting

Describe and discuss a reason for audit failure.

Describe and discuss a reason for audit failure.

Solutions

Expert Solution

Audit failure means conducting an audit which doesn't pretend the true and fair view of financial statements which are free from material misstatements arising due to frauds or errors.

This means the auditor risk towards financial statements is material and the audit report may not be apt for the given period.

Reasons for audit failure::

1. Improper planning by audit team

2. No knowledge of business

3. Improper communication between the management and the auditor.

4 in competency of the auditor ie not updated with relevant legal requirements and regulations.

5. Human error

6. Negligence by auditor and lack of professional skepticism

7.miss applying or interpretation of Gaap and IFRS

8. Auditor committing fraud with management by knowingly issuing more favourable audit report than is warranted.

9. The Auditor can be influenced directly or indirectly in the financial interest of the audit client.

10. Factors effecting auditor's independence like personal relationship with clients .

ekkarill92 answered 2 years ago
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