List and briefly explain four objectives of an audit of financial statements

(i) Forming an Opinion
The main objective to enable auditors to express an opinion as to whether the financial statements give a true and fair view of the state of affairs of the company in question, and whether they‘ve been prepared in accordance with the applicable reporting framework.
(ii) Transparency
Audited financial information portray a positive image of an entity. It shows to the public what the entity is in existence for and the purpose of its activities. This reduces suspicion and improves relations with external entities.
(iii) Detection and Prevention of Frauds
Though not the principle objective of an audit the procedures set out by the auditor to achieve this objective highlights to management the weaknesses of the company‘s control system and puts on alert anyone who may have intention of defrauding the company.
(iv) Assistance in clerical accounting work and advice
The auditor should ideally not involve himself in the operations of the entity. He should not take any part of decision making and neither should he make it a primary concern to prepare the entity‘s financial statements. However, in the course of his work, the auditor could assist client staff in basic accounting functions and once in a while advice management on proper course of actions to take depending on circumstances in question.

Share through

Leave a Reply

Your email address will not be published. Required fields are marked *