Auditing in business world Essay Example | Topics and Well Written Essays - 1750 words

Auditing in business world - Essay ExampleThis paper aims to discuss whether it is just to involve or blame the studyors for companies failures or bankruptcies or level(p) fraudulent activities. Are auditors really part of the blame-game or is the public just reacting on what they perceive as the auditors failure to see and to report these bankruptcies and fraudulent activities Is on that point really a sally on what the public expects auditors to do and to report and what the auditors argon really tasked to doAccording to Robert K. Elliot (1998), the purpose of the audit is to provide assurance that the stationors and the stakeholders nates rely on the information presented by management in the companys financial statements and that they argon not taking on undue financial risk when they invest in such a company. The auditors report, the ultimate output of the external auditor, is meant to communicate the various claims of the auditors. These claims are that the auditors have complied with the required auditing standards, that they are independent of the company they are auditing and that they are stating that the balances of the company (as presented in the accompanying financial statements) are escaped from material misstatements and are thus, reliable to the outside readers and users.The website, www.abrema.net, defined expectations gap in auditing as the gap between the auditors actual standard of performance and the various public expectations of auditors performance (as opposed to their required standard of performance). The same website enumerated the various expectations of the public. These expectations include (but are not limited to the following) (1) that the auditors should have prime responsibility for the financial statements that they audited (2) that auditors certify the financial statements (3) that when auditors provide a clean opinion, this means that the financial figures are accurate and free from error (4) that auditors should gi ve early warning about the possibility of business failure and (5) that auditors are supposed to detect fraud. Another exposition, according to Stanley Martens, is that this gap is the difference between (1) what the public and other financial statement users perceive auditors responsibilities to be and (2) what auditors believe their responsibilities entail (2001). Mr. Martens went on to state that this expectation gap has been in existence for several years (even decades) now and may have stemmed from previous well-publicized hearings in a previous fraud case.Still another definition from Marianne Ojo is that is the expectations gap is the difference between what users of financial statements, the general public perceive an audit to be and what the audit profession claim is expected of them in conducting an audit (2006). In fact, there is also a distinction between the expectations of the audit profession of an external audit and the perception of the external auditor. Thus, even within the bill profession, such an expectation gap exists.Components of Expectation GapWww.abrema.net further divides expectations gap into the requirements gap, where there is a difference between the actual performance of the auditor and what is required by the current standards of the society and the feasibility gap, is the difference between societys required standard