9- Reliable accounting and financial reporting aids society in allocating resources in an efficient manner. Explain...

9- Reliable accounting and financial reporting aids society in allocating resources in an efficient manner. Explain why audits are demanded by society? Support your answer from the Annual report of 2019 of Saudi Aramco?

Expert Solution

The demand for auditing is because there is a need for accountability when business owners hire others to manager their business. Auditing is demanded because it plays a valuable role in monitoring contractual relationships between the entity and its stockholders, managers, employees, and debt holders.Financial statement users include investors (shareholders), suppliers, customers, lenders, employees, governments, and the general public. These groups of users demand audited financial statements because of their remoteness from the entity, accounting complexity, their incentives competing with those of the entity's managers, and their need for reliable informationon which to base decisions. The theories used to describe the demand for audit and assurance services are agency theory, the information hypothesis, and the insurance hypothesis.

Auditing provides assurance to investors and creditors that company funds are handled appropriately. ... By reviewing financial statements and digging into accounting records, auditors can determine whether the financial statements and records accurately depict the company's true financial profile.

Independent auditor’s report to the shareholders of Saudi Arabian Oil Company Report on the audit of the consolidated financial statements Our opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Saudi Arabian Oil Company (the “Company”) and its subsidiaries (together the “Group”) as at December 31, 2019, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards, that are endorsed in the Kingdom of Saudi Arabia, and other standards and pronouncements issued by the Saudi Organization for Certified Public Accountants (SOCPA).

ekkarill92 answered 2 years ago

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