The Auditor s Responsibility For Detecting Fraud

The main issue in this case is that in the standard audit reports that go with the financial statements, â€Å"the auditor’s responsibility for detecting fraud is not discussed (Mancino, 1997)†. This is occurring because â€Å"auditors do not examine every transaction that happens or event and that would mean there is no guarantee that all material misstatements, whether caused by error or fraud could be detected (Mancino, 1997)†. There should be a spot on the audit report that states the auditor’s roles and their limitation into finding fraud. â€Å"There also seems to be some issues between the rules of the PCAOB has and the language that auditors use in their reports do not match (Holl, 2005)†. They should add a phrase to their audit reports that says it was either caused by error or fraud and to take accountability of knowing fraud had happen since it is the auditor’s job to show that the financial statements are free of material missta tements. Another reason this is occurring is the fact it is pretty much a pass or fail type of report it is not very detailed. The recommendation I would have for handling these issues are getting languages to match what the auditors do and what the investors want to see when they’re reading the auditor’s report. We also need to bring back that the auditor’s reports and include the term â€Å"certify† as if they were to guarantee that they have reviewed the financial statements with an external stamp of approval. â€Å"This leaves it in the auditor’s hands andShow MoreRelatedEssay On Auditing1647 Words   |  7 Pagesfulfilled by auditors which is yet to be comprehensively determined and agreed upon by industry leaders, regulators and governments however according PCAOB Chairman  « detecting fraud is the responsibility of external auditors and that with few exceptions they should find it  »(CFO.com 2004). 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