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    Responsibilities of Auditors

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    Gandreti Jagadeesh
    Auditors are responsible for verifying a company's financial records and ensuring accuracy. They examine bookkeeping records, tax filings, and other documents. External auditors are independent third parties hired to audit a company, while internal auditors are employees who audit their own company. Both aim to identify errors, cut costs, and improve accounting. IRS auditors also review tax returns for accuracy and compliance with tax codes. When auditing a prospectus for an IPO or private placement, auditors verify financial statements, confirm non-financial information is not misleading, and provide a "comfort letter" evaluating the prospectus for regulators. The overall goal of auditors is to evaluate company finances and accounting to ensure legal and ethical practices.

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    Responsibilities of Auditors

    Uploaded by

    Gandreti Jagadeesh
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    Auditors are responsible for verifying a company's financial records and ensuring accuracy. They examine bookkeeping records, tax filings, and other documents. External auditors are independent third parties hired to audit a company, while internal auditors are employees who audit their own company. Both aim to identify errors, cut costs, and improve accounting. IRS auditors also review tax returns for accuracy and compliance with tax codes. When auditing a prospectus for an IPO or private placement, auditors verify financial statements, confirm non-financial information is not misleading, and provide a "comfort letter" evaluating the prospectus for regulators. The overall goal of auditors is to evaluate company finances and accounting to ensure legal and ethical practices.

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    Auditors are responsible for verifying a company's financial records and ensuring accuracy. They examine bookkeeping records, tax filings, and other documents. External auditors are independent third parties hired to audit a company, while internal auditors are employees who audit their own company. Both aim to identify errors, cut costs, and improve accounting. IRS auditors also review tax returns for accuracy and compliance with tax codes. When auditing a prospectus for an IPO or private placement, auditors verify financial statements, confirm non-financial information is not misleading, and provide a "comfort letter" evaluating the prospectus for regulators. The overall goal of auditors is to evaluate company finances and accounting to ensure legal and ethical practices.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    31 views3 pages

    Responsibilities of Auditors

    Uploaded by

    Gandreti Jagadeesh
    Auditors are responsible for verifying a company's financial records and ensuring accuracy. They examine bookkeeping records, tax filings, and other documents. External auditors are independent third parties hired to audit a company, while internal auditors are employees who audit their own company. Both aim to identify errors, cut costs, and improve accounting. IRS auditors also review tax returns for accuracy and compliance with tax codes. When auditing a prospectus for an IPO or private placement, auditors verify financial statements, confirm non-financial information is not misleading, and provide a "comfort letter" evaluating the prospectus for regulators. The overall goal of auditors is to evaluate company finances and accounting to ensure legal and ethical practices.

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    Download as docx, pdf, or txt
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    RESPONSIBILITIES OF AUDITORS

    Introduction:
    The Audit Commission (the Commission) is responsible for appointing auditors and determining their terms of appointment, as well as for preparing a Code of Audit Practice, which prescribes the way in which auditors are to carry out their functions. The Commission has prepared a Code for the audits of local government bodies and a Code for the audit of local NHS bodies. From time to time, the Commission issues guidance to auditors under section 3(8) of the Audit Commission Act 1998 (the Act) and paragraph 7 of Schedule 1 to the Act. This statement sets out guidance on general responsibilities relevant to audits in both sectors and so supports each Code. The purpose of this statement is to assist auditors and audited bodies by summarising where - in the context of the usual conduct of an audit - the different responsibilities of auditors and of the audited body begin and end, and what is to be expected of the audited body in certain areas. Throughout this statement, the term 'audited body' covers both the members of the body (for example, elected members in local authorities and directors of NHS bodies) and its management (the senior officers of the body). The responsibilities of auditors are derived from statute (principally the Audit Commission Act 1998) and from the Code. Nothing in this statement is intended to limit or extend those responsibilities. In particular, audited bodies should note that, because auditors must not prejudice their independence of the audited body, the audit role does not include providing financial or legal advice or consultancy to the audited body. Auditors may wish to refer to, and/or incorporate, this statement in audit planning documents, annual audit letters, reports and other audit outputs.

    Definition of auditor:
    Auditors are in the accounting field and their main duty is to verify a company's records to make sure that all the information matches up to what was provided. An auditor has to go through bookkeeper records, creditor records and tax records in order to find out if any errors have been made and if so, what needs to be done to fix them.

    External Auditor Duties


    An external auditor is either self-employed, or is employed at a firm that is hired by the company. This type of auditor comes in as an independent third party in order to check records. Their reports are used in order to help find errors, cut costs and improve general accounting. The roles and processes of an external auditor can vary from country to country. Due to the significant developments of FASB merging with IASB, perhaps soon enough experts from around the world can follow another's work without discrepancies. Until that day, auditors must have knowledge of the particular countries audit procedures as well as the business they are working with. External auditors do not have the benefit of working with the company on an everyday basis. A significant effort must be made to familiarize themselves with the company or the industry. This may be done through extensive training, study of the workings of the industry, to questions made to management about their operations. This is essential for a successful audit review. 1

    RESPONSIBILITIES OF AUDITORS
    A cornerstone of the difference between an internal auditor and an external auditor is company-wide independence. An external auditor must have independence. When reviewing a company's financial statements cannot have any close ties with the company. This means no stocks, close relatives with stocks, management positions, etc. This policy was put into place to ensure a total objective review in which influences would not affect the outcome of the audit. Situations of this matter may be obvious; however sometimes there are various shades of gray. When in doubt, speak to a supervisor and use your best judgment! Sometimes it is better to not take the case if the auditor's independence can be compromised.

    Internal Auditor Duties


    Internal auditors are employees of the company that they are auditing. Large companies often have at least one auditor on their accounting staff. The duties do not differ much from those of external auditors, but the experience of dealing with a single company's books allows internal auditors to become very efficient at going through and checking all of the facts and figures. An internal auditor's job is vital to a company. The desire of an internal audit staff is to look at the overall strategic goals of the company and help them excel in a reliable and ethical manner. They evaluate and improve the company's systems of compliance, control, and risk assessment. With this review, the company can safely carry out its operations with reasonable confidence. Reviews made to internal control and risk management identify areas that need improvement. Recommendations are made to the proper personal to develop better business practices and performances. In these procedures, the storage of information and security is tested for effectiveness. Though the information gathered for financial statements needs to be transparent, the protection of customer sensitive information must be held in the utmost respect of the company. The internal auditor may make suggestions on how to better safeguard this information from being accessed by persons other than necessary personal.

    IRS Auditor Duties


    The type of auditor that most people are familiar with is the IRS auditor. They look over federal tax returns in order to make sure that the information is accurate. This often requires contact with the taxpayers or businesses in question to get complete and accurate information. This type of auditor also requires continuing education in order to keep up to date on federal tax codes. A prospectus is a document that is issued every time a sale of securities takes place, either through an initial public offering (IPO) on an organized stock exchange or through a private placement transaction. Essentially, a prospectus is a company's business plan that also contains information about the securities being issued. To protect investors, independent auditors have to perform due diligence of the prospectus. An audited prospectus is then approved by the regulator (the Securities and Exchange Commission (SEC) in the United States), and the securities are sold to investors.

    RESPONSIBILITIES OF AUDITORS
    Verify Financial Statements
    One of the key responsibilities of an auditor with regards to making due diligence on a prospectus is to verify all financial statements, including balance sheet, profit and loss statements, and cash flow statement. All accounts need to be checked and verified. If the firm presents consolidated statements of all its affiliates the individual statements comprising the consolidated statements need to be diligently verified as well.

    Confirm Non-Financial Parts


    The prospectus also contains a lot of information of non-numerical nature, such as the description of the firm's products or the firm's prospects. It is an auditor's responsibility to confirm that there is no misleading or fraudulent information contained in the non-financial parts of the prospectus.

    Write a Comfort Letter


    The auditor has to write a so called "comfort letter" to the regulator (the SEC in the United States). In it, the auditor, informs the authorities about his examination of the company and provides information about the statements included in the prospectus. It is necessary to note, however, that the auditor displays no opinion about whether the company is a good buy, though the auditor can provide negative assurance (a term used by Certified Public Accountants, meaning that the reviewed financial information is correct from the legal point of view).

    Conclusion:
    According to this I conclude that auditors evaluate and improve the company's finances and accounting procedures to ensure safe and ethical practices are conducted within the regulations of the law and related governances.

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