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   krishna-agrawala Teacher
   Graduate School

   Management of the company is responsible for all the actions and results of the organisations they manage, Thus management is also responsible for the frauds and errors committed by the organization.

   Auditors have no responsibility to either manage the company or to produce result. Responsibility of auditors is limited to auditing or checking the records of the company to check if the operations of the company in respect of its transaction involving monetary implication have been carried out in accordance with laid down statutory standards and sound business practices. The auditors also check and certify if the financial statements of the companies they audit reflect correct and complete record of the companies operation. In doing so they are expected to exercise reasonable care and judgement. But the auditors have to rely on the documents and information furnished by the management, and they cannot always be expected to uncover every fraud and every error. For example, an auditor may not be able to correctly assess the authenticity of a skillfully forged document provided by management.

   Thus the auditors are responsible for detecting and reporting on all frauds and errors committed in a company. They are required to possess the required knowledge and skill to do this effectively. However in spite of their best efforts it is possible for some minor errors to escape their attention. Also they may not be able to detect some skillfully shielded frauds. They cannot be held responsible for such errors and frauds. But when, when failure to report such errors or fraud can be attributed to negligence or deliberate complicity of the auditors, they become answerable for it.

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   Posted by krishna-agrawala on Saturday July 4, 2009 at 6:04 PM