Reviewed by Sep 28, 2020| Updated on
Who is an Auditor?
An auditor is an individual approved to review and check the accuracy of financial reports and to ensure compliance with tax laws by corporations. Auditors defend companies from fraud, point out inconsistencies in accounting processes, and work on a consulting basis to help organisations find ways to improve organisational effectiveness. The auditors work within various sectors in different capacities.
How Auditors Work?
Auditors review financial processes to make sure companies operate efficiently. They are charged with monitoring the cash flow from start to finish and ensure that the funds are adequately accounted for by an organisation.
In the case of public entities, an auditor's primary responsibility is to determine whether financial statements meet commonly accepted accounting principles (GAAP). To satisfy this requirement, auditors review a company's accounting documents, financial statements, and other operational aspects and take comprehensive notes on each phase of the procedure, known as an audit trail.
When done, the auditors' results are summarised in a report that appears in the financial statements as a preface. The business management and regulatory authorities can also be given independent, special reports.
Independent auditors have to periodically review the books of all corporations by official auditing procedures. The International Audit and Assurance Standards Board (IAASB), a committee of the International Federation of Accountants (IFAC), defines suitable methods.
Unqualified Opinion vs Qualified Opinion
An unqualified view generally follows reports to auditors. Those statements indicate that the financial statements of the company are GAAP compliant, without offering opinion or interpretation.
Where an auditor is unable to provide an unqualified opinion, he or she must give a piece of qualified advice, a declaration indicating that the information presented is limited in scope and/or the audited organisation has not followed the standards of GAAP accounting.