Auditors liability & social and environmental auditsWhat does Auditor Liability mean? The most general definition of an audit is an evaluation of a person, organization, system, process, project or product. Audits are performed to ascertain the validity and reliability of information, and also provide an assessment of a system's internal control. The goal of an audit is to express an opinion on the person/organization/system etc. under evaluation based on work done on a test basis. Due to practical constraints, an audit seeks to provide only reasonable assurance that the statements are free from material error.
Hence, statistical sampling is often adopted in audits. In the case of financial audits, a set of financial statements are said to be true and fair when they are free of material misstatements - a concept influenced by both quantitative and qualitative factors. Traditionally audits were mainly associated with gaining information about financial systems and the financial records of a company or a business (see financial audit). However recently auditing has begun to include other information about the system, such as information about environmental performance. As a result there are now professions that conduct environmental audits. In financial accounting, an audit is an independent assessment of the fairness by which a company's financial statements are presented by its management.
It is performed by competent, independent and objective person or persons, known as auditors or accountants, who then issue an Auditor's report on the results of the audit. Such systems must adhere to generally accepted standards set by governing bodies that regulate businesses. It simply provides assurance for third parties or external users that such statements present 'fairly' a company's financial condition and results of operations. Purpose of the auditThe overall purpose of the audit is to validate the answers in the Questionnaire based on the standards mentioned above.
More specifically, the aims will be: • to assess and understand your working practices in the areas covered by our Questionnaire• to identify any problem areas• if needed, to agree on an action plan for improvement with timeframes and responsibilities. Generally Accepted Auditing StandardsThe external, independent CPA must follow generally accepted auditing standards (GAAS) when performing the financial statement audit. These ten broad standards include three general requirements for the individual auditor, three standards for fieldwork, and four reporting standards.
Authoritative guidance regarding the application of these ten general standards is provided in Statements on Auditing Standards (SASs), which are issued by the AICPA's Auditing Standards Board. The general standards require the CPA to be proficient in accounting and auditing, to be independent from his or her client, and to exercise due professional care. Before accepting an audit client, the auditor must determine if he or she will be able to provide the necessary services on a timely basis and must have no financial or managerial relationship with the company whose financial statements are being audited. The fieldwork standards address what is required when actually performing the audit work.
The auditor must plan the engagement and supervise assistants. The auditor must obtain an understanding of the company's internal controls. The auditor must obtain sufficient competent evidence to support the financial statement assertions.