Compare the auditor's focus in an audit with the public's general expectation.

Question

Quizplus · Accepted Answer

The Answer is The public generally expects that an auditor will ferret out all errors and fraud in a client. The reality of auditing is a bit different, however. As a practical matter, an auditor focuses on errors and fraudulent financial reporting because they directly affect the financial statements and are often highly significant. Auditors are less concerned with misappropriation of assets because the amounts involved tend to be small and often have little direct impact on the financial statements unless the culprit tries to hide the theft by manipulating the accounting records. Professional standards require that the audit be planned so as to provide reasonable assurance that significant errors or fraudulent misstatements will be detected, regardless of their cause. Professional standards also acknowledge that a well-planned audit may not detect all fraudulent misstatements, especially those involving collusion among multiple persons or forgery of documents.

Compare the Auditor's Focus in an Audit with the Public's