Question

What is the role of the external auditor in the preparation and integrity of financial statements? Whose role is more important—management or the external auditor?

Answer 1

External auditors primary role is to express opinion on financial statement prepared by the management. Preparation of financial statement is the responsibility of management . Auditor has to express opinion whether balance sheet , profit and loss account and cash flow statement shows true and fair view of company.

Thus management is prima facia responsible for prepration of financial statement.

Role of auditor in preparation of financial statement is

1.identify any risk of material misstatements exists on financial statement

2. Communicate any deficiency exists in financial statement to Management and TCWG.

3. Verify financial statement are prepared with compliance of laws and regulations .

Comparing management with auditors responsiblity is something unfair because these two have different responsibility one is responsible for prepration of financial statement while other is for giving opinion whether prepared Financ statement gives true and fair state of affairs or not.