Tuesday, June 21, 2011

#105- What can an auditor do?

Below is the query raised by one of our blog's readers:

" Somehow I came across ur blog online. I'm curious to know the difference between a auditor n accountant. I'm stuck in a situation where my company's accounts was done using MYOB Software to keep records, then when the YAs ended, we will send to our accounts auditor to do for us. but the problem nw is, when our accounts does not tally, they did not help to check for us n throw back to us to do all checking. I mean, we are not certified accountants( we onli used the MYOB software) to keep our accounts records. Now our accounts is stuck. Does it means tat auditor do not do accounting jobs? "

Our view are as belows:

Strictly speaking, auditor is not allowed to investigate the discrepancies for the book-keeper. Auditor is bound by the principle of independence, which means that auditor is allowed to reviewed and checked the account and provide opinion on the true and fairness of the account they are auditing. Auditor is strictly prohibited from investigating the difference and helping you to tally.

In short, to answer your question, auditor is not allowed to perform accounting jobs.

However, if the difference is not material, you may highlight to auditor that the amount is immaterial and they may consider to discharge.

7 comments:

Anonymous said...

I like to add that this is a very good point. I used to work in an asian country as an auditor but has since moved to Australia. I am still an auditor today.

The general perception in asian countries, especially the clients are that auditors are also accountants. THIS IS A GRAVE MISCONCEPTION.

Auditors are the reviewers of your accounts. By right, they are BOUND by audit standards to remain independence and only let you know if any discrepancies is noted. You as a bookeeper or accountant is responsible is solving that because YOU own the accounts, you MADE the accounts.

Take it as a situation of an exam. The auditors are the examiners. The accountants are the candidates as the accountants does the account. If anything needs to be resolved, it should be the accountant's responsibility and not the auditors.

The misconception I have mentioned earlier is a result of many lax attitude asian auditors who give in to their "clients" demand to help them resolve issues. Asian auditors will bow to this pressure in order to maintain a good audit fee or in their way of justifying their action "provide a full-range service" to client.

Please take note that an auditor CAN NOT prepare the financial statement. They can only review and point out the errors.

Unfortunately, this is not the case in asian countries.

This is also a reason why asian auditors work like there's no tomorrow because auditors in asian countries generally does everything for the client.

This is a very regrettable situation, but it is happening and I do not see any change to this for at least the near future.

- hf

Audit Armenia said...

Our audit work is carried out using GT HorizonTM audit methodology and GT VoyagerTM audit software.

Jianhe said...

I will like to say that is not possible in the real practice world.. auditor have to make audit adjustment in order to make the figure tally.

We cant just leave the figure unbalance.. the client in those small firm expect auditor to do both audit and accounts.

I think this is wrong and this practice has been carry on for so long. There can never have independence in practice.

Auditor prepare financial statement for client... how can they have independence?

Business Services Armenia said...

Right. That's why it is called an auditor and not accountant.

Peter said...

In short, to answer your question, auditor is not allowed to perform accounting jobs.

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Mark Farrell said...

Strictly speaking, auditor is not allowed to investigate the discrepancies for the book-keeper.

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accountant nj said...

Great question, great answer. The word 'audit' in auditor probably misleads most people to think that auditors also do the accounting.