Topic 4: Auditing

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The profession of the auditor is considered to be one of the most presti­gious and well-paid ones. Auditors are accountants who analyze financial state­ments of the company and their responsibility is to express an opinion as to whether the accuracy of the company's financial reporting meets the require­ments imposed by the government. In general, auditors deal more with oper­ating efficiency and managerial effectiveness than with the accuracy of the accounting data.

Internal auditors are known to be hired by the company in order to help to identify accounting weakness and correct them before significant errors occur. They are often analytically minded people who make flowcharts of accounting systems and evaluate these flowcharts to suggest improvements in division of labour, paper flow, cash control, or other accounting respon­sibilities.

Independent (external) auditors are employed by a company's board of directors to supply the stockholders with the results of checking the financial statements, in order to prove that annual reports are fair representations of the financial position of the company. Performing his work the auditor should follow sev­eral principles and assumptions: the company's accounts must represent a true financial position; generally accepted accounting principles have been used at all accounting steps and accounts can be compared with those of sim­ilar companies; the proper amount of information is disclosed in the finan­cial statements. As a result, the auditor's opinion should be based only on facts and it must be objective. Auditors are expected to maintain a relation­ship of strict independence and professionalism with the companies for whom they work, so they mustn't hold shares in these companies. On the one hand, the auditor should respect the client's confidence, so having access to some private information, the auditor must not spread it outside. On the other hand, he should think of public interests, that is why he must publish his opinion in a standard form and the information is to be clear to the stockholders. But he must always carry out his duties under the law and inform authorities about fraud.