Essay on The Key Value of Auditing

606 Words 3 Pages
Auditing plays a vital role in business, government and economy. The key value of auditing is its ability to provide an independent assurance on the integrity and fairness of financial information produced by companies and other entities. An auditor is under a statutory duty to report to members on the company’s financial statements for an accounting period and on the accounting records relating to those financial statements (s.308). Auditors are required to provide an auditor’s report to the members (i.e. shareholders with voting rights) of the company concerning the financial statement audit. The auditor must express an opinion on whether the financial statements are in accordance with the Corporations Act, comply with accounting standards (s.296) and give a true and fair view (s. 297).
Going concern modification of the audit report is a suitable setting to investigate in audit reporting behavior. First it matters as the auditors reports play may critical role in warning market participants of a firm’s ability to continue as a going concern (DeFond et al. 2002; Geiger et al. 2006). Second, such type of modifications should not be a matter for negotiation between the auditor and the company.

Audit report plays a very important determinant to be used by the various investors and interested parties to get information in relation to the ability of the company or firm to continue as a going concern entity. But the failure of auditors to accurately and consistently use…