0
Auditors cannot provide absolute assurance due to the inherent limitations of the audit process, such as the use of sampling rather than examining every transaction and the potential for human error or fraud that may go undetected. Additionally, financial statements are based on estimates and judgments that can vary significantly, adding uncertainty to the audit results. Consequently, auditors can only offer reasonable assurance that the financial statements are free from material misstatement.
What else can I help you with?
Why do organisation require internal and external auditors?
auditor check reliability of financial data of the organization, and he give assurance about financial data of an organization.
Why is it not possible to give an absolute level of assurance in audit?
It is not possible to provide an absolute level of assurance in an audit due to inherent limitations in the audit process, such as the use of sampling rather than examining every transaction and the potential for human error or fraud that may go undetected. Auditors rely on evidence that is persuasive but not conclusive, as complete certainty is often impractical. Additionally, the complexity of financial reporting and the subjective nature of some estimates further complicate the ability to achieve absolute assurance. Thus, auditors provide reasonable assurance, which indicates a high level of confidence without guaranteeing absolute accuracy.
Why do independent auditors not give complete assurance?
Independent auditors do not provide complete assurance because their work is based on sampling rather than a full examination of every transaction. They assess the risk of material misstatements and use professional judgment to determine the extent of testing required. Additionally, inherent limitations exist, such as the potential for human error, fraud, and the subjective nature of accounting estimates, which further restrict the level of assurance that can be offered. Consequently, auditors provide reasonable assurance, indicating a high level of confidence but not an absolute guarantee.
Does a trial balance with both sides' totals matching give you 100 percent assurance that there are no errors in your accounting books?
Does a trial balance with both sides' totals matching give you 100% assurance that there are no errors in your accounting books
What does reliability mean in terms of audit evidence Give an Example?
It's the ability of an auditor to give a comprehensive, logical and convincing audit report. A good example of where reliability applies is in cases where there is change in files and backup files are unavailable.
What is absolute assurance?
Absolute Assurance is the highest level of assurance an auditor can give, if s/he checks each and every transaction. Therefore, absolute assurance is the level of assurance that can only be given if the auditor does not perform sampling testing. However, because of the time and costs involved, it is not feasible for an auditor to give 100% level of assurance. With much fewer costs and time involved, s/he will be able to provide around 60% level of assurance by providing what is called Reasonable Assurance.
Why an auditor doesnot gives absolute assurance?
An Auditor cannot give absolute assurance because of the Inherent Limitations of Audit. i.e 1. Work of an auditor is permiated by judgment 2. Most of Audit evidences are persuasive rather than conclusive 3. Audit is of Test Nature 4. Inherent Limitations of Internal Control. Perhaps this is what item 1 means but let me say it anyway- the auditor can be paid off to hide the truth , ignore red flags and make the books look good. Sometimes the pay-off is subtle- the auditor is made aware that the client is important to the firm and that a unfavorable audit would cause the firm to lose the account.
Why do organisation require internal and external auditors?
auditor check reliability of financial data of the organization, and he give assurance about financial data of an organization.
Why is it not possible to give an absolute level of assurance in audit?
It is not possible to provide an absolute level of assurance in an audit due to inherent limitations in the audit process, such as the use of sampling rather than examining every transaction and the potential for human error or fraud that may go undetected. Auditors rely on evidence that is persuasive but not conclusive, as complete certainty is often impractical. Additionally, the complexity of financial reporting and the subjective nature of some estimates further complicate the ability to achieve absolute assurance. Thus, auditors provide reasonable assurance, which indicates a high level of confidence without guaranteeing absolute accuracy.
What is the limitation in auditing?
Conflict with others: - Auditor may have differences of opinion withthe accountants, management, engineers etc. In such a casepersonal judgement plays an important role. It differs from person toperson.Effect of inflation : - Financial statements may not disclose truepicture even after audit due to inflationary trends.Corrupt practices to influence the auditors :- The managementmay use corrupt practices to influence the auditors and get afavourable report about the state of affairs of the organisation.No assurance :- Auditor cannot give any assurance about futureprofitability and prospects of the company.Inherent limitations of the financial statements :- Financialstatements do not reflect current values of the assets and liabilities.Many items are based on personal judgement of the owners. Certainnon-monetary facts can not be measured. Audited statements due tothese limitations can not exhibit true position.Detailed checking not possible :- Auditor cannot check each andevery transaction. He may be required to do test checking
How can an investor verify the validity valuation and Existence of the Accounts Receivable?
Answer:Investors usually cannot verify the amount of accounts receivable. In order to do this, investors would need to perform an audit. This is why an audit by an external auditor has value to investors. The auditor visits the copmay to perform an audit. While performing the audit, the company is supposed to give the auditor full access to all files/records. The auditor reports its findings of the audit in the annual report.
Why do independent auditors not give complete assurance?
Independent auditors do not provide complete assurance because their work is based on sampling rather than a full examination of every transaction. They assess the risk of material misstatements and use professional judgment to determine the extent of testing required. Additionally, inherent limitations exist, such as the potential for human error, fraud, and the subjective nature of accounting estimates, which further restrict the level of assurance that can be offered. Consequently, auditors provide reasonable assurance, indicating a high level of confidence but not an absolute guarantee.
What assurance does Athena give to telemachus?
That his father is not dead and is in Ithaca
Difference between assurance and insurance?
Assurance is a feeling you give someone when they are confident in you. Insurance is a financial instrument that protects you if you experience a loss.
What is the duty of an auditor?
Duties of internal auditor is to overview the internal control system in company to ensure sound internal control systems. Duty of external auditor is to examin the books of accounts and give verdict about true and fair nature of books of accounts.
What is Qualified and unqualified auditor report?
At the end of audit engagement, an auditor can give hisÊopinion Êin the auditor's report as either qualified or unqualified. Unqualified report is one that the auditor is satisfied that the business Êor an organisationÊhas present fairly its affair in all material aspect. WhileÊa qualified Êreport oneÊwhich theÊauditor concludes Êthat most matter have been dealt with but not sufficiently.
What assurance does Scrooge beg the spirit to give him?
That the scene he has witnessed are scenes of what may be an not will be
