Although we’re auditors ourselves, because we’re a charity seeking to help the needy, disadvantaged and disenfranchised of society, we’re on the side of the ‘little man’. Which means the audit client in this case. Hence, this post begins, Oh dear! I’ve just seen an auditor do it again. And that makes it far too many times in the last few months.
Before I tell you what, an explanation is necessary. Professional auditors in Australia, that is those who are a member of one of the three professional accounting bodies, are required to comply with the Australian Auditing Standards. And this is irrespective of the size, type and complexity of the client.
These Standards include what the auditor has to include in their audit report. And by implication what they shouldn’t include.
Now to what I’ve just seen again. I’ve just seen another audit report with a set of financial statements that says, under the heading Auditor’ Responsibility, that
their “procedures included the examination, on a test basis, of evidence” (emphasis added).
If you’d read the report closely enough to have seen this, and you were one of those users who thought that auditors checked everything, then you would have learnt something. Or if you knew that auditors sampled your paperwork then you probably thought ‘That makes sense.’ But I’m going to suggest a third response: why is our auditor using an out-of-date audit report format/content? And not just recently superseded either: this wording was superseded in April 2006 – yes 2006. Eight and a half years ago! So then you would be quite justified in thinking: if they are wrong with this, how much can I rely on their work?
P.S. Business by The Book exists to provide accounting, audit and governance services, for no fee if necessary, to not-for-profits who are themselves serving those who are the cultural equivalents of the Bible’s fatherless, widows and aliens.