An Evaluation Of The Independent Auditor Is Responsible For Obtaining Reasonable Assurance?

An Evaluation Of The Independent Auditor Is Responsible For Obtaining Reasonable Assurance?

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a. Reasonable assurance simply means that there is a high, but not absolute level of assurance that the financial statements are free of material error at the end of the audit. This is not a guarantee, therefore while financial statement users can be fairly confident in the audit results, they need to account for the inherent risk that material misstatements could potentially still be present.
b. The independent auditor is responsible for obtaining reasonable assurance about whether the financial statements are free from material misstatements. The auditor is also responsible for reporting on the financial statements and communicating results in accordance with the auditor’s findings. This requires to auditor to maintain an attitude of professional skepticism throughout the audit process. Professional skepticism requires a questioning mindset along with a critical assessment of the audit evidence.
Auditors are also responsible for detecting material errors in the financial statements. This requires careful planning and performance of audit procedures. In addition, auditors have a responsibility to consider laws and regulations. The auditor must take into account all laws and regulations that apply to their client.
c. Auditors have a responsibility to attempt to detect fraud in financial statement. This is appropriate since fraud can result in a material misstatement in the financial statements, and change the information that users of the statement would use to make their decisions.
Fraudulent financial reporting leads to incorrect financial statements which is harmful to the decision making of users. While this is more difficult to detect, since management is usually attempting to conceal the fraud, auditors still ha...

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...tention of auditors to areas that need more attention. This allows the auditors to focus efforts in the areas most likely to uncover material misstatements.
b. Analytical procedures are required during the planning and completion phases of all audits. They are used frequently throughout all aspects of an audit engagement. Since analytic procedures are performed at all phases of an audit, this can help auditors drill down and focus on the most important information.
c. The auditor will use the results of analytical procedures instead of detailed tests when the procedures will provide the level of assurance that they want to meet a particular objective. If there are no unusual fluctuations present, the risk of material misstatements will be reduced. In that case the analytical procedures would provide the appropriate evidence to support the financial statements.

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