800:
independent of the activities they audit, are part of the organization they audit, and report to management. Typically, internal auditors are employees of the entity, though in some cases the function may be outsourced. The internal auditor's primary responsibility is appraising an entity's risk management strategy and practices, management (including IT) control frameworks and governance processes. They are also responsible for the internal control procedures of an organization and the prevention of fraud.
25:
788:
correct and thorough appraisal of an entity's financial controls and statements. Any relationship between the external auditors and the entity, other than retention for the audit itself, must be disclosed in the external auditor's reports. These rules also prohibit the auditor from owning a stake in public clients and severely limits the types of non-audit services they can provide.
103:
787:
External auditors also undertake management consulting assignments. Under statute, an external auditor can be prohibited from providing certain services to the entity they audit. This is primarily to ensure that conflicts of interest do not arise. The independence of external auditors is crucial to a
783:
numbers to general ledger and make inquiries of management. In compilation auditors are required to take a look at financial statement to make sure they are free of obvious misstatements and errors. An external auditor may perform a full-scope financial statement audit, a balance-sheet-only audit, an
771:
may be organized as LLCs or corporate entities. The organization of audit firms has been a subject of debate in recent years on account of liability issues. For example, there are rules in EU member states that more than 75% of the members of an audit firm must be qualified auditors. In India, audit
799:
Internal auditors who are members of a professional organization would be subject to the same code of ethics and professional code of conduct as applicable to external auditors. They differ, however, primarily in their relationship to the entities they audit. Internal auditors, though generally
839:
While the
Ultramares doctrine is the majority rule, (to the relief of many new and budding accountants pursuing an auditing career!) the restatement standard is preferred in several states and is growing in popularity. The foreseeability standard will not likely be widely adopted anytime soon
714:
The manner of appointment, the qualifications, and the format of reporting by an external auditor are defined by statute, which varies according to jurisdiction. External auditors must be members of one of the recognised professional accountancy bodies. External auditors normally address their
835:
Under the
Ultramares doctrine, auditors are only liable to 3rd parties who are specifically named. The Restatement Standard opens up their liability to named "classes" of individuals. The foreseeability standard puts accountants at the most risk of liability, by allowing anyone who might be
758:
commercial entities are appointed by an independent government body such as the
Comptroller and Auditor General. Securities and Exchange Commissions may also impose specific requirements and roles on external auditors, including strict rules to establish independence.
843:
CFOs, company accountants, and other employees are not provided the same luxuries of the doctrine of privity. Their material actions and statements open them (and their companies) up to liability from third parties damaged by relying on these statements.
981:
Gramling, Audrey A.; Nuhoglu, Nur Irem; Wood, David A. (September 2013). "A Descriptive Study of
Factors Associated with the Internal Audit Function Policies Having an Impact: Comparisons Between Organizations in a Developed and an Emerging Economy".
808:
If an external auditor detects fraud, it is their responsibility to bring it to the management's attention and consider withdrawing from the engagement if management does not take appropriate actions. Normally, external auditors review the entity's
707:, and is independent of the entity being audited. Users of these entities' financial information, such as investors, government agencies, and the general public, rely on the external auditor to present an unbiased and independent
1067:
825:
Auditors may be liable to 3rd parties who are damaged by making decisions based on information in audited reports. This risk of auditors' liability to third parties is limited by the doctrine of
719:
are the only authorized non-governmental external auditors who may perform audits and attestations on an entity's financial statements and provide reports on such audits for public review. In the
883:
1019:
965:
35:
754:(SOX) has imposed stringent requirements on external auditors in their evaluation of internal controls and financial reporting. In many countries external auditors of
829:. An investor or creditor, for instance, can not generally sue an auditor for giving a favorable opinion, even if that opinion was knowingly given in error.
905:
773:
367:
813:
control procedures when assessing its overall internal controls. They must also investigate any material issues raised by inquiries from professional or
352:
791:
The primary role of external auditors is to express an opinion on whether an entity's financial statements are free of material misstatements.
779:
In the USA, the external auditor also performs reviews of financial statements and compilation. In review auditors are generally required to
357:
1038:
666:
517:
221:
118:
832:
The extent of liability to 3rd parties is established (in general) by 3 accepted standards: Ultramares, restatement, and foreseeability.
372:
362:
128:
424:
552:
429:
69:
377:
320:
1016:
962:
461:
414:
1087:
863:
836:
reasonably foreseen to rely on an auditor's reports to sue for damages sustained by relying on material information.
716:
51:
902:
951:
659:
466:
728:
300:
176:
784:
attestation of internal controls over financial reporting, or other agreed-upon external audit procedures.
592:
527:
102:
878:
810:
251:
931:
920:
577:
315:
181:
123:
47:
732:
688:
627:
166:
858:
826:
652:
617:
612:
587:
582:
522:
451:
409:
391:
344:
325:
256:
161:
86:
999:
768:
751:
456:
291:
246:
1082:
637:
632:
211:
186:
1062:
991:
419:
305:
1023:
969:
909:
868:
700:
507:
471:
261:
241:
226:
171:
156:
113:
1052:
743:
512:
480:
191:
1076:
1003:
747:
736:
692:
622:
485:
404:
399:
236:
16:
Person who audits an entity's financial statements and is independent of that entity
873:
780:
755:
708:
704:
557:
296:
942:
Australian
Securities Commission Act - Appointment & Independence of Auditors
995:
443:
814:
696:
547:
231:
94:
840:
because the cost (time and financial) of litigation would be enormous.
330:
310:
216:
1068:
Discussion of the
Sarbanes-Oxley Act in relation to external auditors
724:
476:
151:
715:
reports to the shareholders of a corporation. In the United States,
853:
684:
499:
281:
146:
286:
18:
720:
884:
772:
firms can only be partnerships of qualified members of
43:
1063:
Typical organization standards for external auditors
963:
Internal and
External Audits; Comptroller's Handbook
687:, in accordance with specific laws or rules, of the
1017:
Internal and
External Audits; Comptrollers Handbook
817:authorities, such as the local taxing authority.
774:The Institute of Chartered Accountants of India
821:External Auditors' Liability to Third Parties
660:
32:The examples and perspective in this article
8:
368:International Financial Reporting Standards
667:
653:
81:
70:Learn how and when to remove this message
895:
93:
358:Generally-accepted auditing standards
7:
932:Audit requirements for UK Companies
921:Audit requirements for UK Companies
373:International Standards on Auditing
14:
746:listed on stock exchanges in the
430:Notes to the financial statements
795:Difference from internal auditor
378:Management Accounting Principles
101:
23:
952:Ownership rules of audit firms
903:Institute of Internal Auditors
1:
737:Certified General Accountants
353:Generally-accepted principles
996:10.1080/14683849.2013.833019
864:Attestation (disambiguation)
717:certified public accountants
763:Organization & services
46:, discuss the issue on the
1104:
739:have served in that role.
1053:Resources in your library
222:Constant purchasing power
119:Constant purchasing power
553:Accounting organizations
541:People and organizations
301:Amortization (business)
879:Board of Audit (Japan)
811:information technology
733:Chartered Accountants
425:Management discussion
689:financial statements
392:Financial statements
345:Accounting standards
52:create a new article
44:improve this article
34:may not represent a
1088:Financial reporting
767:In some countries,
618:Earnings management
588:Positive accounting
462:Double-entry system
452:Bank reconciliation
257:Revenue recognition
1022:2010-11-07 at the
968:2010-11-07 at the
908:2010-11-23 at the
804:Detection of fraud
752:Sarbanes-Oxley Act
593:Sarbanes–Oxley Act
528:Sarbanes–Oxley Act
457:Debits and credits
292:Cost of goods sold
247:Matching principle
1039:Library resources
677:
676:
638:Two sets of books
633:Off-balance-sheet
275:Selected accounts
212:Accounting period
80:
79:
72:
54:, as appropriate.
1095:
1044:External auditor
1026:
1014:
1008:
1007:
978:
972:
960:
954:
949:
943:
940:
934:
929:
923:
918:
912:
900:
859:Auditor's report
744:public companies
681:external auditor
669:
662:
655:
105:
82:
75:
68:
64:
61:
55:
27:
26:
19:
1103:
1102:
1098:
1097:
1096:
1094:
1093:
1092:
1073:
1072:
1059:
1058:
1057:
1047:
1046:
1042:
1035:
1030:
1029:
1024:Wayback Machine
1015:
1011:
984:Turkish Studies
980:
979:
975:
970:Wayback Machine
961:
957:
950:
946:
941:
937:
930:
926:
919:
915:
910:Wayback Machine
901:
897:
892:
869:Financial audit
850:
806:
797:
765:
673:
644:
643:
642:
607:
599:
598:
597:
572:
564:
563:
562:
542:
534:
533:
532:
502:
492:
491:
490:
446:
436:
435:
434:
394:
384:
383:
382:
347:
337:
336:
335:
276:
268:
267:
266:
262:Unit of account
242:Historical cost
227:Economic entity
206:
198:
197:
196:
141:
133:
114:Historical cost
76:
65:
59:
56:
41:
28:
24:
17:
12:
11:
5:
1101:
1099:
1091:
1090:
1085:
1075:
1074:
1071:
1070:
1065:
1056:
1055:
1049:
1048:
1037:
1036:
1034:
1033:External links
1031:
1028:
1027:
1009:
990:(3): 581–606.
973:
955:
944:
935:
924:
913:
894:
893:
891:
888:
887:
886:
881:
876:
871:
866:
861:
856:
849:
846:
805:
802:
796:
793:
764:
761:
699:entity, other
675:
674:
672:
671:
664:
657:
649:
646:
645:
641:
640:
635:
630:
625:
620:
615:
609:
608:
605:
604:
601:
600:
596:
595:
590:
585:
580:
574:
573:
570:
569:
566:
565:
561:
560:
555:
550:
544:
543:
540:
539:
536:
535:
531:
530:
525:
520:
515:
510:
504:
503:
498:
497:
494:
493:
489:
488:
483:
481:General ledger
474:
469:
464:
459:
454:
448:
447:
442:
441:
438:
437:
433:
432:
427:
422:
417:
412:
407:
402:
396:
395:
390:
389:
386:
385:
381:
380:
375:
370:
365:
360:
355:
349:
348:
343:
342:
339:
338:
334:
333:
328:
323:
318:
313:
308:
303:
294:
289:
284:
278:
277:
274:
273:
270:
269:
265:
264:
259:
254:
249:
244:
239:
234:
229:
224:
219:
214:
208:
207:
204:
203:
200:
199:
195:
194:
189:
184:
179:
174:
169:
164:
159:
154:
149:
143:
142:
139:
138:
135:
134:
132:
131:
126:
121:
116:
110:
107:
106:
98:
97:
91:
90:
78:
77:
38:of the subject
36:worldwide view
31:
29:
22:
15:
13:
10:
9:
6:
4:
3:
2:
1100:
1089:
1086:
1084:
1081:
1080:
1078:
1069:
1066:
1064:
1061:
1060:
1054:
1051:
1050:
1045:
1040:
1032:
1025:
1021:
1018:
1013:
1010:
1005:
1001:
997:
993:
989:
985:
977:
974:
971:
967:
964:
959:
956:
953:
948:
945:
939:
936:
933:
928:
925:
922:
917:
914:
911:
907:
904:
899:
896:
889:
885:
882:
880:
877:
875:
872:
870:
867:
865:
862:
860:
857:
855:
852:
851:
847:
845:
841:
837:
833:
830:
828:
823:
822:
818:
816:
812:
803:
801:
794:
792:
789:
785:
782:
777:
775:
770:
762:
760:
757:
753:
749:
748:United States
745:
740:
738:
734:
730:
726:
722:
718:
712:
710:
706:
702:
698:
694:
690:
686:
682:
670:
665:
663:
658:
656:
651:
650:
648:
647:
639:
636:
634:
631:
629:
626:
624:
623:Error account
621:
619:
616:
614:
611:
610:
603:
602:
594:
591:
589:
586:
584:
581:
579:
576:
575:
568:
567:
559:
556:
554:
551:
549:
546:
545:
538:
537:
529:
526:
524:
521:
519:
516:
514:
511:
509:
506:
505:
501:
496:
495:
487:
486:Trial balance
484:
482:
478:
475:
473:
470:
468:
467:FIFO and LIFO
465:
463:
460:
458:
455:
453:
450:
449:
445:
440:
439:
431:
428:
426:
423:
421:
418:
416:
413:
411:
408:
406:
405:Balance sheet
403:
401:
400:Annual report
398:
397:
393:
388:
387:
379:
376:
374:
371:
369:
366:
364:
361:
359:
356:
354:
351:
350:
346:
341:
340:
332:
329:
327:
324:
322:
319:
317:
314:
312:
309:
307:
304:
302:
298:
295:
293:
290:
288:
285:
283:
280:
279:
272:
271:
263:
260:
258:
255:
253:
250:
248:
245:
243:
240:
238:
237:Going concern
235:
233:
230:
228:
225:
223:
220:
218:
215:
213:
210:
209:
202:
201:
193:
190:
188:
185:
183:
180:
178:
175:
173:
170:
168:
165:
163:
160:
158:
155:
153:
150:
148:
145:
144:
137:
136:
130:
127:
125:
122:
120:
117:
115:
112:
111:
109:
108:
104:
100:
99:
96:
92:
88:
84:
83:
74:
71:
63:
60:December 2010
53:
49:
45:
39:
37:
30:
21:
20:
1043:
1012:
987:
983:
976:
958:
947:
938:
927:
916:
898:
874:Single Audit
842:
838:
834:
831:
824:
820:
819:
807:
798:
790:
786:
781:tick and tie
778:
766:
756:nationalized
741:
729:Commonwealth
713:
709:audit report
705:organization
701:legal entity
683:performs an
680:
678:
558:Luca Pacioli
479: /
299: /
297:Depreciation
205:Key concepts
177:Governmental
66:
57:
33:
769:audit firms
571:Development
548:Accountants
444:Bookkeeping
363:Convergence
321:Liabilities
252:Materiality
140:Major types
1077:Categories
890:References
815:regulatory
727:and other
697:government
606:Misconduct
232:Fair value
182:Management
124:Management
95:Accounting
1004:145381015
628:Hollywood
508:Financial
410:Cash-flow
167:Financial
48:talk page
1083:Auditing
1020:Archived
966:Archived
906:Archived
848:See also
731:nations
613:Creative
583:Research
513:Internal
500:Auditing
316:Goodwill
311:Expenses
162:Forensic
87:a series
85:Part of
42:You may
827:privity
693:company
578:History
472:Journal
331:Revenue
217:Accrual
1041:about
1002:
750:, the
725:Canada
523:Report
477:Ledger
420:Income
415:Equity
326:Profit
306:Equity
282:Assets
187:Social
152:Budget
1000:S2CID
854:Audit
703:, or
691:of a
685:audit
518:Firms
147:Audit
50:, or
742:For
735:and
287:Cash
172:Fund
157:Cost
992:doi
679:An
192:Tax
129:Tax
1079::
998:.
988:14
986:.
776:.
723:,
721:UK
711:.
695:,
89:on
1006:.
994::
668:e
661:t
654:v
73:)
67:(
62:)
58:(
40:.
Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.
