+1-415-670-9189
info@expertsmind.com
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
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Auditing) Materials
What appears to have been the incentives and opportunities to commit the fraud? Comment on the likely ethical dilemma that Cynthia Cooper faced when she initially uncove
ACC 302 - Identify at least three inherent risks that you would have considered for the company in the audit planning phase and justify your answer - Identify the type of au
HI6026 Audit, Assurance and Compliance Assignment. You are an audit manager with Clarke & Johnson (CJI). For each situation, identify and evaluate any threats in relation to a
Objectives:  understanding planning stage of the audit process:  review of client business and perform audit risk analysis(applicable textbook chapters 4, 5 and 6)
What if a client approaches you with an engagement request that you are not sure your CPA firm provides? Knowing which services are offered and how they are performed helps
Evaluate the following comments about compiled financial statements: "When CPAs associate their name with compiled financial statements, their only responsibility is to the cl
When assessing the tolerable deviation rate, the auditor should consider that, while deviations from control procedures increase the risk of material misstatements, such dev
Based on relevant accounting pronouncements for the sale of real estate, how should Leno, Inc. account for the transaction at March 31, 2011 and what additional type of evid