+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.




Ask Question & Get Answers from Experts
Browse some more (Auditing) Materials
List the internal controls that should be in effect solely because a EDP system is employed, classifing them as (1) Those controls pertaining to input of information and (2)
From the case study, evaluate the quality of REDTOP's internal audit function. Based on your evaluation, recommend at least two (2) changes that you would make in order to i
The for-profit entity sells $120,000 with net 30-day terms, while the nonprofit entity has a fund raising drive for which they receive pledges of $120,000. How do the two jo
Prepare Fenton's journal entries to record the sale on December 31, 2011. Prepare Fenton's journal entry on December 31, 2012, necessitated by this transaction. (Hint: Prepar
What is life-cycle costing? Under what circumstances can it be most useful? What are some potential problems with this approach? What is target pricing? Under what circumstanc
Explain the purposes and reasons for public accounting firms to perform an integrated audit. Address the Sarbanes-Oxley Act (SOX) and explain corporate governance and its re
To test this control, identify the population from which you should select a sample to test this control and for a given sample unit in this population, what would be an "erro
Demonstrate the entry that should be made in a capital projects fund at inception of the lease after initial payment has been made and demonstrate the entry that should be ma