-
BBunmi Mercy 3 years ago
Audit is an official examination of the accounts of an entity by an Auditor. The audit profession is often associated with some widely held but false beliefs. Some of the audit myths are:
1. Audits are performed to catch thieves or detect theft. Gone are the days when Auditors show up at their client’s office unannounced in order to detect any suspicious activity. The objective of an Audit is not to detect fraud but to ascertain whether the Financial Statement of an entity is in accordance with applicable framework. However, an Audit can be performed in such a way that errors and frauds are detected.
2. Auditors check all transactions. Have you heard of sampling? Audit sampling is the application of audit test to less than 100% of the entire transactions. So, auditors do not check all the transaction (except in special cases), they only sample.
3. Auditors prepare the Financial statement. The responsibility of preparing Financial Statement solely lies with management. It is the responsibility of management and those charged with governance to prepare the Financial Statement.
4. An unqualified audit opinion indicates that the company is in great shape and their Financial Statements are free from errors. Sometimes audited financial statements may still contain errors, however, the errors are not material enough to affect judgment and decisions of the user. Remember, auditors are mostly concerned with material misstatement, hence they set materiality threshold.
5. Audit is only beneficial to the auditor. One of the benefits of an audit is that it helps to identify errors in the financial statements of the entity. It ensures that transactions are accurate and complete hence audit is beneficial to both parties.
6. Auditors are bad people. Auditors are human first, they have emotions, they have morals and they are guided by principles. Auditors should not be termed bad for ensuring that books of account are properly presented in accordance with applicable framework. Auditors are actually one of the nicest people you will ever meet. So, when next you meet an Auditor, don’t hesitate to give them a hug, they deserve it.
Which of these myths are you guilty of? Which other myths do you know?