Australian Auditing Standards Essay

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Recommended: Role of external auditors for financial statements

The Australian Auditing Standard (ASA) establishes requirements on the responsibilities of an auditor when contracted to undertake an audit of a financial report, complete set of financial statements or other historical financial statements. Reports generated by auditors need to be of quality, meaning that the main objective of ensuring the financial statement is free of material inaccuracy and that material deficiencies detected are addressed and communicated through the audit report. Audits reports have to be as accurate as possible as it is key to confident and informed markets and investors. Improving quality of audit execution is crucial to maintaining =confidence in the independent assurance audit firms provide.

Quality audit reports and execution does not just stem from following the ASA, but rather, auditors are …show more content…

Auditing by external parties are needed for government compliance, credibility, fraud prevention and process improvement. An external auditor helps identify where are the areas that are no longer in compliance with current regulations and recommend the changes to be made to shareholders. Doing an external audit provides a source of credibility from a different point of view and provides stakeholders of private companies a way to properly assess the financial health of the organisation.

An external audit also ensures protection from fraud. As external auditors are impartial to the company, they examine the bookkeeping records without personal relationships affecting their judgement. All companies want to maximise the potential of their equipment and staff. External auditors provide recommendations in areas where they feel could be improved, automated and made more streamlined, to reduce inefficiency and waste. This allows the company to decide whether to implement the auditor’s recommendations or put a plan in place to address the problem over

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