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
Describe the relationships between cash in the bank and transaction cycles. Where are you likely to gain the most accurate information?
What is meant by planned detection risk? What is the effect on the amount of evidence the auditor must gather and evaluate when planned detection risk is increased from medi
Describe the elements of the Generally Accepted Auditing Standards (GAAS). Describe how these standards apply to financial, operational, and compliance audits.
Discuss how the concept of risk can be used to detect one of the financial statement fraud schemes. Ensure to include specific procedures to detect the fraud scheme of your ch
Audit Scope and Purpose - Needs to be developed based on the audit findings. Need paragraph or few lines on each. What is the scope of the audit and what is the primary pu
The concept of valuing Inventories at the "Lower of Cost or Market" and the estimated "full absorption cost" of manufacturing 100 stag horn buttons
Jane O'Reilly is a staff accountant and earns $39,000 annually. She is married to Sid Metcalf, a full-time student at State University. Sid earned $1,200 from securities his
Astor City, a small city that is not required to have independent audit, voluntarily decided to have an audit of its financial records. Currently, the city generates $900,00