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Discuss whether external financial auditors are responsible if they do not detect material financial statement fraud.

Discuss whether external financial auditors are responsible if they do not detect material financial statement fraud.

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Answer #1

The objective of the auditor is to obtain reasonable assurance as to whether the financial statements as a whole are free from material misstatements whether due to fraud or error to enable the auditor to form an opinion on financial statements.

The term reasonable assurance is the highest level of assurance but it is not a guarantee that the audit conducted in accordance with standards will definitely identify all material misstatements that exist.

If the auditor can prove that as per his audit documentation he gave an opinion which is consensus with the evidences obtained then he will not be liable to be made responsible even if he doesn’t detect a fraud.

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