Tímarit um endurskoðun og reikningshald - 01.01.1976, Blaðsíða 44

was an important objective of early au-
dits.
Over several decades, however, the im-
portance of the detection of defalcations
as an audit objective decreased steadily.
The objective of the ordinary examination
changed from being primarily concerned
with providing “clearance to the treasu-
rer” to being concerned with the fair pre-
sentation of the financial statements in
conformity with generally accepted ac-
counting principles.
Causes of that change in the objectives
of auditing are numerous, but some of
the rnore important reasons are the fol-
lowing:
/ As ownership and management sepa-
rated, a stewardship check on employees
becaine less significant than an objective
review of management’s stewardship re-
port—the financial statements.
2 Debt and equity financing transacti-
ons and mergers and consolidations ex-
panded in volume, creating an increased
need for concern with the general reliabi-
lity of accounting records and financial
statements.
3 Rapid growth in the size and com-
plexity of business enterprises necessitated
changing an audit to an examination of
selected tests rather than an examination
of all transactions.
4 The importance of an adequate in-
ternal accounting control system to pre-
vent and detect errors and irregularities
became generally recognized.
5 The growing complexity of business
transactions made the appropriate selec-
tion and application of accounting prin-
ciples and adequate disclosure more diffi-
cult and, hence, a more likely source of
material misstatement of financial state-
ments.
6 The increased pace of change and
development in the business environ-
ment significantly increased the difficulty
of making reasonable estimates of future
evens. This appraising the reasonableness
of management’s judgements concerning
the effect of uncertainty on the finan-
citl statements became an important ob-
jective for auditors.
Thus, the objectives of auditing chan-
ged primarily because the relative import-
ance of various sources of misstatement of
financial statements changed. However,
fraud is one potential source of material
misstatement in financial statements and
when an auditor expresses an unqualified
opinion he should believe, and have rea-
sonable grounds for his belief, that the
financial statements are free from mate-
rial misstatement—no matter what the
possible source.
Independent auditors do assume res-
ponsbility for detecting frauds that would
be uncovered by an examination perfor-
med in accordance with generally accep-
ted auditing standards. Obviously, some
frauds are excluded from that responsi-
bility. What frauds would an examina-
tion performed in accordance with gener-
ally accepted auditing standards detect?
How extensive a search for fraud is ne-
cessarv to exercise due professional skill
and care?
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