Question

What is audit failure?

Answer 1

Audit failure is a situation where an audit wrongly states that a company's financial statements are correct but it contains mistakes and false statements.

Causes of audit failure

- Human errors like unintetionally miapplying or misinterpreting GAAS, GAAP

- Sometimes auditor receives bribe and intentionally issue a favorable report

-  The auditor can be unduly influenced by having direct or indirect financial interest in the audit client

- The auditor may have personal relationship with client beyond a normal client.