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Relationships Among Auditor, Client and External Users

Compare the relationships among auditor, client, and external users. How do professional standards for CPAs govern these relationships?

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The independent auditor and accountants rely so much with their clients for maximum audit effectiveness. Good communication is very essential for them to prepare an accurate record of financial statements. Oftentimes, there is a frequency and seriousness of blocks in communication in external auditing. Some of the reasons or factors affecting this are credibility/background and hostility/conflict factors. Among the attitudes that affect their relationship are personality differences, superiority complex, and resistance to change and jumping to conclusions.

According to Vinten, auditors can detect problems in financial statements, e.g., misstatement, fraud. Sometimes the causes of audit failures are the inexperienced staff and the lack of professional skepticism. In these cases, auditors must not assume that the client is dishonest. Instead, they have to evaluate evidence objectively to determine the accuracy of the financial statements.

Although it is important that auditors are independent, oftentimes it is impossible for them to keep impartiality and objectivity. The main purpose of audit is for the benefit of the external users. However, without a negotiated and collaborated effort between the ...

Solution Summary

The solution compares the relationships among auditor, client and external users. It also explains how professional standards for CPAs govern these relationships. References are included.