What Auditors Do And Don’t Do
Auditors play an important role in the accounting industry. In this post, you will learn what an auditor is, what they do and what they don’t.
What Is an Auditor?
For the purpose of accounting, an auditor is a person whose job it is to ensure that the information reported on financial statements is accurate and true and that the financial statements are prepared according to GAAP (Generally accepted accounting principles) principles . GAAP principles for financial reporting must be followed by accounting professionals.
What Do Auditors Do?
The most vital thing that an auditor does is to form an opinion. Keep in mind that an auditor’s opinion is not just any old opinion, but his or her opinion can make or break the reliability of your company’s financial statement information. Auditors will form their opinions based only on the information collected in the audit. Also, the GAAP protocol on financial reporting needs that this opinion must be a part of the notes to the financial report.
Furthermore, notes to the financial report are footnotes that show up at the base of the reports that provide financial statement users added information regarding things that show up on the statements. If the auditor’s opinion does not appear on the financial report, they don’t fulfill the set standards. Remember, audited financial statements of a company that contain the written opinion of an auditor are deemed to be true, reliable and valid.
What auditors don’t do
Do not take responsibility for the financial statements on which they form an opinion.
Do Not prepare or make changes to source documents
Do not authorize, execute or consummate transactions on behalf of a client
Do not establish or maintain internal controls
Do not report to the board of directors on behalf of management
Do Not Sign payroll tax returns on behalf of a client
Do not approve vendor invoices for payment
Do not Hire or terminate employees
Some other tasks you should not expect your auditor to perform are:
Analyze or reconcile accounts and “Close the books”
Prepare financial statements
Determine restrictions of assets and estimates included in financial report and
Set up account coding or classifications
Prepare confirmations for mailing and locate invoices, etc., for testing
Choose accounting policies or procedures
Find out retirement plan contributions
Implement corrective action plans
Prepare an entity for audit
Establish value of your company’s assets and liabilities
Maintain client permanent records
Audit services in Pune assure your organization’s consistence with requirements of applicable laws, regulations, rules, financial reporting standards or contracts. The most common audit & accounting services provided by audit firms in Pune include Accounting, Audit, Review & Compilation and Internal Audit.