Auditors Responsibilities on Financial Statements (Explained)

The process of getting financial statements audited is a really important step in lieu of ensuring that the organization has presented true and fair view of their financial position over the past year.

Therefore, the responsibility of an auditor to provide assurance on that particular claim is quite significant, since it really impacts the overall stakeholders.

Therefore, auditors’ responsibilities can be defined as follows:

Risk Assessment, Audit Risks, and Audit Procedures

Identifying and assessing the overall risk of material misstatement of the entity’s financial statements. This also includes any chances of errors, frauds, or incorrect declaration by the organization.

Furthermore, the auditor is also responsible to ensure that he is able to perform audit tasks and procedures responsive to the audit risks that are identified.

Subsequently, it is also important to obtain audit evidence that is sufficient and appropriate enough to provide the basis for the auditors’ opinion.

Internal Controls

Additionally, the auditor is also responsible for obtaining an understanding of the internal controls that are present relevant to the auditor in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing their thought regarding the organizations’ internal control.

If the controls are strong, then auditors might relying on the controls so that they might reduce audit sample size.

If the control is concluded to be weak then the risk of material misstatement of over financial reporting are high then the sample sizes of the transactions or balance in the financial statements to be reviewed will be increasing up 100%.

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Accounting Estimates

The auditor is also responsible to ensure that the accounting policies and the overall reasonableness of the accounting estimates is done appropriately.

Related disclosures should also be made in order to provide any additional information that might be useful to either of these parties.

Audit Conclusion

After having conducted the relevant audit risk assessments, auditors are also responsible to conclude on the overall extent to which the going concern basis is reflected in the accounting.

Furthermore, based on the audit evidence that is obtained, it should also be seen if material uncertainty exists related to the events, which may question the entity’s overall ability to continue as a going concern.

In case of a material uncertainty, the auditor is required to disclose and draw attention in the auditor’s report pertaining to the existing issues.

Furthermore, related disclosures should also be made in the financial statements. Basically, the auditor is responsible to draw conclusions based on audit evidence, which is obtained until the date of the audit completion.

Therefore, determination of the extent to which the organization is a going concern is quite a significant responsibility of the auditor.

Presentation and Fair Disclosure

Additionally, the auditor is also required to evaluate the overall presentation, structure and content of the information included in the financial statements, which includes the disclosures, and if financial statements are in full compliance which achieves fair representation.

Basically, an auditor is also responsible for providing assurance regarding true and fair value being represented in the Financial Statements.

Group Audits

In the same manner, it can also be seen that when the auditor is required to report on consolidated financial statements, he needs to obtain sufficient audit evidence regarding the overall financial information of the entities or business activities within the group in order to express an opinion on the consolidated financial statements.

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Therefore, in this regard, the group auditor is responsible for the direction, supervision and the overall performance of the group audit. The group auditor, therefore, also has to take sole responsibility for the audit opinion.

Therefore, the responsibilities of the auditors can be seen as a step forwards, towards verification and validation of the responsibilities that have been undertaken by the management.

Therefore, in this regard, the auditor is responsible more than the organization itself, because the auditor is solely responsible for ramification in case of any error of judgement, which might fail to reflect a true and fair view of the organization.

This is perhaps the most integral responsibility of any auditor.