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    Question

    Refer to the following information to answer the next 4 questions (Q17 to Q20) The word Audit is derived from Latin word “Audire” which means ‘to hear’. Auditing is the systematic examination of financial statements, records and related operations to determine adherence to generally accepted accounting principles, management policies and stated requirement. Importance of auditing can be judged from the fact that even those organizations which are not covered by Companies Act get their financial statements audited. It has become a necessity for every commercial and even non- commercial organization. A company appoints an auditor who submits his opinion on the truthfulness and fairness of the financial performance and position of the company. An auditor’s Report is the format of result of all the effort that goes into the audit. Communicating the Auditor’s findings to interested users is part of all audits. Thus, the Final phase of an Audit involves preparing that communication, which is known as auditor’s report.

    Which of the following quality is required in an auditor

    to safeguard his/her ability to form an audit opinion without being affected by any influences?
    A Objectivity Correct Answer Incorrect Answer
    B Independence Correct Answer Incorrect Answer
    C Confidentiality Correct Answer Incorrect Answer
    D Integrity Correct Answer Incorrect Answer
    E Fairness Correct Answer Incorrect Answer

    Solution

    Auditor is required to have an attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence. 1.    Independence - Maintain impartiality and keep actions and reporting bias free without any outside influence. The auditor should not have any fiduciary relationship with the client, so as to be able to give an independent view on the financial statements. 2.    Integrity- Withstand pressure that may be exerted and take care to comply with any legal requirements. 3.    Fair representation - Present all results fairly and report significant concerns. 4.    Due professional care - Due diligence, due care and reasoned judgements in every situation 5.    Confidentiality- Keep information secure and protect confidential and sensitive information. do not divulge sensitive information of client to third party. 6.    Objectivity and Evidence- based - auditing should follow fact-based approach to reach reliable conclusions

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