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Essay / Research Paper Abstract
The role of the auditor is to give an opinion regarding the truthfulness and fairness of the financial statements in the annual accounts. This 3 page paper considers to what degree the auditor is responsible for detecting fraud and their liability to shareholders who rely on their opinion. The bibliography cites 4 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEaudfraud.rtf
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Unformatted sample text from the term paper:
the shareholders the performance of an annual audit has the aim of reducing this gap. The duties and responsibilities of the auditor are laid down in the Companies Act 1985
sections 235 and 237. In this there is the requirement for the auditor to report on every balance sheet and every profit and loss sheet that is put before the
company at the AGM (ACCA, 2004). The basis of the auditing procedures is made on an exception basis, which means no news is generally seen as good news (Elliott and
Elliott, 2005). The auditor has to report on matters that materially affect the accounts, the only matters that need to be referred to are the truth and fairness of
the accounts, it is other matters that are reported by exception only (ACCA, 2004). However, in the case supplied by the student there has been an audit that failed
to pick up on fraud perpetrated by the directors. An investors believes that the opinion was wrong, that if all the transactions had been checked that the fraud would have
been noticed and that the fraud was in the stock with falsified figures that the auditor did not notice, so the investor believes this implied that all was well wit
the stock. Just as with any other profession is is possible for auditors to be held negligent if they do not meet their professional duties. The question was whether,
in this case there was a failure to meet the professional standards, or if the investor has a misunderstanding of the role of the auditor and the purpose and meaning
of their report. In the past there have been cases brought for negligence against well known auditor such as F W Pixey in Woodhouse Rawson United Lim also the
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