Why auditors are called watchdogs and not bloodhound? Many companies view auditing as a necessary regulatory evil and an unnecessary cost to be minimised. Auditors like to say their role is that of a watchdog who barks when they see something suspicious rather than a bloodhound who actually searches for something suspicious. What is the meaning of blood hound?
What types of evidence does an auditor examine to verify the accuracy of your financial statements? An Audit is a process of identifying whether the results of accounting information are accurate and according to the specified norms or not. Auditing is an impartial and methodical examination of the financial statement of an entity to give an opinion on true and fair view. The term entity refers to any organisation whether it is profit making or a charitable institution.
Size and structure of the entity are also irrelevant. A person who is doing work of investigation known as investigator. It can be done by any person having expertise of doing such work or in such area. An investigation is a severe examination of specific records so as to highlight a fact. It always start with preconceive notion. Investigation implies that an organised, detailed and critical examination of the books of accounts and transaction records both past and present of an entity, conducted for a specific purpose or to reveal a truth or to establish a fact with the help of evidence.
The most common methods employed in the process of investigation are searching, observation, interrogation, inquiry, inspection, etc. In most audits, fraud risk will be one of several risks that are evaluated as part of the business processes under audit. If fraud is suspected, the internal auditor may be asked to perform a forensic audit specifically to detect fraud management must have a robust anti-fraud program to safeguard assets and minimize the risk of fraudulent financial reporting and misappropriation of assets.
It is the responsibility to find true and fair value of the business and gives all the details errors and frauds of all the business. But this task is so difficult because people tried who arise fraud in the company gives wrong information to the company.
Auditor is always sincere, systematic, honest, truthful, and tactful. An auditor has a professional knowledge and expert in own field. In case of any unwanted situation.
The remedial action has to come from the owner of the entity. He has to discharge his responsibility by informing about the irregularity found in the audit. Auditor needs to discharge his responsibility of forming an opinion and reporting responsibility as per SA as well as given in the companies act, under section 12 in prescribed form no ADT Auditor is responsible for protecting the interest of those who appointed him but the auditor will presume that servants of the company are honest and will rely on their statements.
The auditor should investigate thoroughly but he is also not expected to be of suspicious mind. Watchdogs keep watch and protect against waste and abuse. They remain aware of their surroundings, act upon suspicious behaviour or activity and may defer to the bloodhound when a relentless pursuit is necessary. Bloodhounds fixate on the scent of the animal and follow the trail through water, rain, sleet and snow until they detect the animal or collapse of fatigue.
Obviously, this approach will result in additional fees, added time and client relationship management issues as they may often perceive our efforts as unnecessary, intrusive, and expensive. Judging by our definitions above, it would appear that auditors fall more into the role of a watchdog who possesses the ability to determine when a bloodhound is needed. So, an auditor will not be legally liable for failing to spot material misstatements resulting from fraud, as long as he can prove that he has undertaken reasonable procedures in trying to detect it.
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