week 5 auditing paper
Internal and external users of financial information require assurance that reports filed are accurate and transparent. Increasingly, both investors and legislators are requiring accountability from executives and financial officers. For this reason, auditing and assurance services must sign-off or attest to the credibility and reliability of written assertions. Creditors rely on the accuracy of financial reports when calculating the risk and interest rate of loans. Investors and employees need reliable information when allocating their precious resources. Governmental agencies require transparency and compliance to insure the public is not being victimized by fraud. Do increased auditing requirements guarantee that there will never be fraud? No! Increased auditing does not promise to prevent fraud, but it does assure us that due diligence is exercised to a reasonable degree in the examination of documents and compliance. Moreover, the benefits of assurance that come from auditing inspire businesses and the economy to thrive. Consequently, the attestation portions of financial reports are a requirement for the Securities and Exchange Commission (SEC) as well. Likewise, the Internal Revenue Service (IRS) itself must consider and factor in these variables when conducting their audits, since depreciation for tax purposes is not usually identical to the depreciation used in financial reporting. Auditing is a process that takes place when an auditor gathers unprejudiced evidence regarding the reliability and integrity of financial statements, compliance, and operational information provided by an organization. Audits can be performed by different people. Independent auditors, such as CPAs, and governmental auditors, or employees working for federal, state, or local government entities. There are different types of auditors who are not directly employed by the organization being audited. Internal auditors, however, are employed by the organization and go on to perform