Why is an audit report addressed to the shareholders?
Historically shareholders and other users of the financial statements might have spent very little time on the auditor’s report. As the auditor’s report is addressed to the shareholders of the company, it implies that the KAMs were identified with these users of the financial statements in mind.
Why audit is important to the shareholders?
An audit is important as it provides credibility to a set of financial statements and gives the shareholders confidence that the accounts are true and fair. It can also help to improve a company’s internal controls and systems.
Do auditors report to shareholders?
Auditors report on the financial statements to shareholders.
What is the purpose of the auditors report?
The auditor’s report is a document containing the auditor’s opinion on whether a company’s financial statements comply with GAAP and are free from material misstatement. The audit report is important because banks, creditors, and regulators require an audit of a company’s financial statements.
Who should the audit report be addressed to?
Ordinarily, the auditor’s report on general purpose financial statements is addressed either to the shareholders or to those charged with governance of the entity whose financial statements are being audited. statements that have been audited, the entity, and the date of and period covered by the financial statements.
What are the consequences of audit failures?
However, a steady stream of audit failures shows that it is also a technology that harms people. Audit failures are routinely implicated with loss deposits, loss of employments and loss of livelihoods of individuals.
What is the main purpose of an audit?
The objective of an audit is to form an independent opinion on the financial statements of the audited entity. The opinion includes whether the financial statements show a true and fair view, and have been properly prepared in accordance with accounting standards.
Who are auditors accountable to?
Whilst auditors carrying out a statutory audit of financial statements are accountable and report to the shareholders of a company only, there may be other stakeholders who believe that an independent audit provides some means of ensuring that the company’s responsibilities to them are being met; in effect that it …
What is a auditor of a shareholder?
An auditor acts as an agent of the shareholders. He is expected to safeguard their interests. In Spackman v. Evans[xii], Cranworth LJ, held that the auditors may be agents of the shareholders, so far as relates to the audit of the accounts.