Question

Discuss and explain the independent auditor's responsibilities to detect and report errors and frauds?

Answer 1

Auditor's top responsibilities while conducting the audit is to deduct all the errors which he/she came across while reviewing and auditing the client's books of accounts and report them accurately in his final audit report.

Generally, audits are conducted to know that there are no frauds or omissions or mistakes or errors in the financial statements reported like Income Statement, Statement of Retained Earnings, Statement of Stockholders' Equity, Cash Flows Statements and Balance Sheet including notes to accounts etc. There are possible areas where client's accountants can make fraud by showing less income in order to avoid taxes or not disclosing part/full of net income or cash to avoid tax or also there are chances where accountants can make errors or omissions or mistakes during the preparation of the said financial statements.

Therefore, to detect such malpractices or mistakes, an independent auditor from outside of that client's organization will thoroughly check all such financial statements, books of accounts etc. to ensure that the financial statements prepared and books of accounts maintained are made based on the true and fair view. Hence, the independent auditor is fully responsible on the client's true and fair view of the financial statements and the final audit report which the independent auditor prepares and submits is the final one to give a clean certification of the client's financial statements of that specific year as this process is same for all the financial years.

Thus, the independent auditor is completely responsible for the client's true and fair view of the financial statements as no other person will review such financial statements until unless required.

So the independent auditor needs to deduct all type of errors and frauds during the audit and report them accurately in his final audit report.