01-15-2009, 11:42 AM
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<b>An audit of true lies Based on Satyam inputs, may be âunreliableâ: PW </b><!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Not so scandalous</b>
<b>Although investors were scandalised by Price Waterhouseâs admission that it hadnât bothered to verify the numbers, the auditor fraternity wasnât terribly surprised.</b>
<b>Several chartered accountants said the role of the auditor was to certify that the companyâs financial statement was presented in a true and fair manner. âAuditors are not investigators,â</b> said Kamlesh Vikamsey, partner of audit firm Khimji Kunverji & Co.
All auditors preface their report with a disclaimer: âThese financial statements are the responsibility of the companyâs management. Our responsibility is to express an opinion on these financial statements based on our audit.â Price Waterhouse had this line in all its auditor reports for Satyam.
The statement brought into the open the grim reality of the audit practice: auditors do not question, tear and rip into a companyâs documented figures unless they have a very good reason to suspect fraud.
So, what really is the auditorâs job? There are three areas that an auditor focuses on: first, it must ensure the audit is conducted in accordance with the auditing standards accepted in India.
Second, an audit requires the examination âon a test basisâ of the evidence supporting the amounts and disclosures in the financial statements.
Third, it involves an assessment of the accounting principles used by the management and the estimates made by it. In doing so, the auditors evaluate the overall financial statement.
<b>When Price Waterhouse says it relied on the companyâs financial statements, it wasnât doing anything extraordinary</b>.
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<b>An audit of true lies Based on Satyam inputs, may be âunreliableâ: PW </b><!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Not so scandalous</b>
<b>Although investors were scandalised by Price Waterhouseâs admission that it hadnât bothered to verify the numbers, the auditor fraternity wasnât terribly surprised.</b>
<b>Several chartered accountants said the role of the auditor was to certify that the companyâs financial statement was presented in a true and fair manner. âAuditors are not investigators,â</b> said Kamlesh Vikamsey, partner of audit firm Khimji Kunverji & Co.
All auditors preface their report with a disclaimer: âThese financial statements are the responsibility of the companyâs management. Our responsibility is to express an opinion on these financial statements based on our audit.â Price Waterhouse had this line in all its auditor reports for Satyam.
The statement brought into the open the grim reality of the audit practice: auditors do not question, tear and rip into a companyâs documented figures unless they have a very good reason to suspect fraud.
So, what really is the auditorâs job? There are three areas that an auditor focuses on: first, it must ensure the audit is conducted in accordance with the auditing standards accepted in India.
Second, an audit requires the examination âon a test basisâ of the evidence supporting the amounts and disclosures in the financial statements.
Third, it involves an assessment of the accounting principles used by the management and the estimates made by it. In doing so, the auditors evaluate the overall financial statement.
<b>When Price Waterhouse says it relied on the companyâs financial statements, it wasnât doing anything extraordinary</b>.
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