The sole reason for the conduction of a financial audit is to check on whether the financial statements are recorded based on a given and approved criteria. Most at times, the criteria are based on a given set of rules of international standards for a given accounting body.
Thus, the duties of an accountant and that of the financial auditor are more of the same despite their different professional affiliation.
Why are accountants not trusted to perform a good financial audit?
Both have different roles to play in an organization
Their roles clearly setups the difference. An accountant is interested in checking out the accuracy with which the books have accounts have been entered. Their main goal is to ensure that the total assets of a company equal to the capital plus liabilities.
On the other hand, a financial auditor is more interested in checking out if the entries made in the books of accounts are a true reflection of truly what happened on the ground. That’s why the one limitation of accounting is that accounting is more interested in working out with a company figures irrespective of where and how they were arrived at. Take an example if the value of a company fixed assets are $10000 dollars the same value will be used in the accounting process irrespective whether they were errors during the posting of the same figures in the journals.
The accounting process is usually subjected to a lot of verification channels
Accounting information is not usually sufficient enough to highlight the position of a business at a particular time. Remember accounting information serves a lot of purpose to the organization. For example, the stakeholders of the organization can check out on how their investment performs?
Thus an organization will need to confirm if indeed the assertions made by the accountant are credible enough and they will bank on whether an internal or external auditor to back up the facts. At times, errors of omission, commission and other types of error may occur during the posting of the accounting information in the ledger accounts. These errors will affect the accountant’s integrity and thus spoil their reputations. This implies that even good accountants with a lot of experience may just need to pass the audit check for clarification.
Some parties do not trust an accountant to do their job
Moreover, not all parties will be satisfied with the accounting information. We somehow know that at times the accounting information may be falsified for possible evasion of tax to the government or for possible sourcing out of funds from banks and other financial institutions.
This may lead to a situation whereby the accounting information fairly represents the company financial position at that given time. The shareholders may be satisfied with the accounting information but other parties such as banks, suppliers, customers, and other companies employees may be interested in knowing if the financial statement is fairly in accordance to the company material facts thus they will need a financial auditor for the clarification.
“In conclusion, both accountants and financial auditor play a part in the company organization. It thus calls for each part to be professional enough to do his or her own work efficiently by maintaining their work code of ethics and no party will be superior or inferior to the other.”