The audit is simply a process by which auditors check the company\u2019s math and application of accounting rules. Most of the investors take audited financial statements as major consideration to invest in a company. But by doing so it leads them to false sense of security when examining the audited frauds. Following are some of the common issues to say why a audited financial statement could not be true.<\/p>\n
There is always a good chance that a key transaction will not be part of the auditors\u2019 sample, and therefore will not be examined. So many transactions are untested by the auditors, and that means there is a very good chance that a fraudulent item will not be part of the testing.<\/p>\n
2.\u00a0Auditors may be inexperienced<\/strong> Most of the inexperienced auditors tend to not ask difficult questions because of their lack of experience.\u00a0Those who have the knowledge to identify problems and ask difficult questions spend very little time in the field. They are best equipped to zero in on fraud, yet they provide little hands-on supervision of the inexperienced auditors.<\/p>\n 3. Audit process are lagging with the dynamic nature of business<\/strong> We can point out many of such similar issues surrounding why\u00a0a audited financial should not be a major consideration in investing on a company, but what we need to understand is that traditional\u00a0financial statement audits were never designed to detect fraud. However, sometimes fraud is detected by auditors, and they can increase their chances of finding fraud if they are so inclined and diligent.<\/p>\n Source:\u00a0http:\/\/www.sequenceinc.com\/fraudfiles\/2013\/06\/escaping-detection-why-auditors-do-not-find-fraud\/<\/p>\n","protected":false},"excerpt":{"rendered":" The audit is simply a process by which auditors check the company\u2019s math and application of accounting rules. Most of the investors take audited financial statements as major consideration to invest in a company. But by doing so it leads them to false sense of security when examining the audited frauds. Following are some of … Continue reading Why audited financial statements should not be a major considerations in investing on a company?<\/span><\/a><\/p>\n","protected":false},"author":1711,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"qubely_global_settings":"","qubely_interactions":"","kk_blocks_editor_width":"","_kiokenblocks_attr":"","_kiokenblocks_dimensions":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-1285","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"gutentor_comment":2,"qubely_featured_image_url":null,"qubely_author":{"display_name":"vinaykjay","author_link":"https:\/\/blogs.scu.edu\/finis\/author\/vinaykjay\/"},"qubely_comment":2,"qubely_category":"Uncategorized<\/a>","qubely_excerpt":"The audit is simply a process by which auditors check the company\u2019s math and application of accounting rules. Most of the investors take audited financial statements as major consideration to invest in a company. But by doing so it leads them to false sense of security when examining the audited frauds. Following are some of…","post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/blogs.scu.edu\/finis\/wp-json\/wp\/v2\/posts\/1285","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.scu.edu\/finis\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.scu.edu\/finis\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.scu.edu\/finis\/wp-json\/wp\/v2\/users\/1711"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.scu.edu\/finis\/wp-json\/wp\/v2\/comments?post=1285"}],"version-history":[{"count":4,"href":"https:\/\/blogs.scu.edu\/finis\/wp-json\/wp\/v2\/posts\/1285\/revisions"}],"predecessor-version":[{"id":1299,"href":"https:\/\/blogs.scu.edu\/finis\/wp-json\/wp\/v2\/posts\/1285\/revisions\/1299"}],"wp:attachment":[{"href":"https:\/\/blogs.scu.edu\/finis\/wp-json\/wp\/v2\/media?parent=1285"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.scu.edu\/finis\/wp-json\/wp\/v2\/categories?post=1285"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.scu.edu\/finis\/wp-json\/wp\/v2\/tags?post=1285"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nThe current business model for audit firms (and the one that has been in place for decades) relies on relatively inexperienced auditors to do the bulk of the field work. While this may make economic sense in terms of controlling the costs of audits, it is a terrible practice from a quality control standpoint.<\/p>\n
\nGiven the dynamic nature of a business through mergers and acquisitions, development of new products and services, and constant strategic planning all mean that business is changing faster than ever. Comparing the financials of a company from year to year becomes nearly impossible because of all the changes. Therefore audit process has to catch up with the dynamic nature of frauds risks.<\/p>\n