RSM323H1 Study Guide - Final Guide: Risk It, Cobit, Remittance
Document Summary
Auditors are providing three-party accountability by reducing the risks that these decisions will be based on inaccurate info. Auditor is independent intermediary lends credibility to finc. Gaap provides guideline to fill gap between buyer and seller, but buyer has no ability to check accuracy or info, and seller has bias to info. Three party triangle: subject matter is central to auditor, accountable party, user. Accountable party owes accountability to user and auditor needs to give the user a conclusion. Auditor acts in public interest -> even though accounting is a function of organization"s mgmgt there is a separation of users from the process because of complexity, remoteness or. Auditing reduces information risk, risk that info is materially misstated arising from errors, lack of knowledge of accounting principles, bias or falsification (deliberate). Auditing doesn"t address business risk (risk that company cannot meet financial obligation due to poor mgmt. decisions). Professional skepticism: definition: tendency not to believe management assertions.
