Question

Differentiate between the auditors' responsibilities to detect errors, fraud, and illegal acts. How would you assess the ethics of a company that has experienced each event with respect to motivation and the integrity of those who go along with such events?

Answer 1

Auditor has a responsibility to conduct a planned audit in order to provide a reasonable assurance to the stakeholders that the financials audited by them are true and fair and to the best of his knowlegde shows corrrect picture of the company

In the process of planning an audit , the auditor should ask the manangement regarding error and fraud already been discovered by the managment in the past

Also it is the duty of the auditor to perform his task with integrity and cautiousness

However the scope of audit is such that , there will be errors and risk and frauds irrespective of conducting the audit properly

The auditor cannot be held liable for any error or fraud not detectd by him provided he has performed his duty correctly , error will some how be detected in the process of audit but frauds are well planned things by higher authority people as well as employees so it is quiet difficult to trace them , if the auditor has enough working paers and evidence to believe that there was no fraud and if the auditor had performed his duty correctly he cannot be held liable

You can come to know about the ethics of the company , on the basis of its past records, the way they do their business, level of transparcy , way management deals with the employess, customer issues etc