Objective of an Audit - The Financial Statements - The Auditor's Report
The objective of an audit is to achieve a level of assurance about an organization's financial condition and operational results by performing certain generally accepted procedures, among which include:
- Comprehensive planning, assessment, and administrative processes
- Comprehensive inquiry and analytical procedures
- Inquiries about internal controls and irregularities, including fraud
- Confirmation of certain balances with financial institutions and third parties
- Confirmation of legal matters and contingencies with legal counsel
- Testing of invoices and other original documents
- Testing of payroll and similar operational transactions
Management is responsible for the preparation of the organization's financial statements, which contain certain assertions about the economic actions and events of the organization. The auditor's role is to gain a level of confidence that management has reported historical financial events of the organization in accordance with generally accepted accounting principles.
The auditor's report, issued at the conclusion of the audit, will express to what degree a reader can rely upon the financial statements as a fair representation of the organization's financial history.