The paper "Role of Audits and Effectiveness of the Auditing Process " is a good example of finance and accounting coursework. Auditing refers to the immediate process that involves the evaluation and review of financial information that has been prepared and presented by the management of a firm in order to establish whether or not they conform to the notions of certain standards, which are mainly availed as a financial reporting framework. It is important to understand that the individual that conducts the aforementioned evaluation adheres to a given set of standards.
They are mostly required to conduct the evaluation and ascertain whether or not a firm adopted the concepts of both fairness and completeness of the immediate decisions that were recorded by a firm in order to avail accurate information to potential end-users for effective decision-making purposes. Significantly, auditing allows the management to focus on information that has been provided for purposes of ensuring that their objectives are not set at an unreasonable level. Therefore, the purpose of this paper is to examine the role of audits and the effectiveness of the auditing process in relation to the management’ s preparations and disclosure of general purpose financial reports. Body Under the principal-agent relationship, the principal, who are mostly owners of the firm, expect the agent or rather the hired management team to report substantively for purposes of easier verification by a hired auditor personnel.
It is noted that since the principal would likely seek the services of an independent auditor, the management team is obligated to prepare and disclose financial reports in accordance with the set guidelines. This is mainly because the auditing personnel are tasked with the responsibility of establishing whether or not the management adhered or rather complied with the set requirements and standards.
Potential end-users of accounting information always benefit greatly whenever it is ascertained that the principal, indeed, allowed the auditing process to take place given that it serves to protect their respective interests within the firm.
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