Benefits and limitations of audit
Course:- Auditing
Reference No.:- EM1354503

Assignment Help
Assignment Help >> Auditing

A fellow business student questions the benefits of an audit as follows:

"Why should a company hire auditors? As far as I can tell auditors of public companies charge millions of dollars in audit fees, and it is not clear to me that management receives any benefit for this expenditure. It is just money down the drain. It is also not clear to me that auditors accomplish anything. We have seen a number of material restatements of financial statements. Why should a company pay for audits that are ineffective? I think auditors are just a drain on society."

a. Explain the economic benefits provided by a financial statement audit.

b. Explain the inherent limitations that might prevent auditors from finding every potential material misstatement in financial statements.

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Auditing) Materials
What is internal audits role in the organization's ethics and compliance program and what is the board's role in the organization's ethics and compliance program?
In outlining your plan, discuss the roles the Internal Audit will play in preventing fraud: Why is each of the groups above reluctant to take the responsibility for detecting
As you are planning the annual audit of Norton Corporation, Comment on the manager's contention. Discuss five types of control that would apply to this microcomputer applicati
Acme Company purchases an oil tanker depot on January 1, 2012, at a cost of $828,000. Acme expects to operate the depot for 10 years. Prepare any journal entries required for
Prepare a 6-7 page research paper that presents the findings of your analysis of the company's SEC filings. Your paper should also discuss the following: Roles, responsibiliti
Select the component of audit risk(a,b,c and d - below) that is most directly illustrated. The components may be used once, more than once, or not at all.
Comment on the appropriateness of work done and conclusions drawn by the audit staff and recommend the right course of action, where applicable.
On September 1, Howe Office Supply had an inventory of 30 calculators at a cost of $18 each.The company uses a perpetual inventory system. During September, the following tr