Changing Role of External Auditor

Changing Role of External Auditor

External audit process has revolutionized in line with the change of auditors’ role, whereby nowadays annual audit has become one of the cornerstones of corporate governance, compared with in the 19th century, fraud detection is the primary objective of corporate audit. Fraud detection functions have moved to be the obligations of company’s director. As the complexity of business developed so came the recognition of the unfeasibility of such an intention. Consequently, the role of the auditor has been altered over time.

The change in audit process and functions have arise following extensive development in information technology (IT) and the perceived needs of the financial information users. As a result of technological revolution, development of prospect for independent auditors to provide assurance on new financial information needs will be spurred. There are nouns of `continuous audit' and `continuous assurance', where it would require only minimal human involvement to review for client highly automated process. This can be linked directly to the importance on the provision of assurance services, which may be viewed as a conservatory of the legitimate audit role. Auditors may be able to scrutinize their clients' systems and processes on a real-time basis.

As far as we concern, the role of the external auditor is to express an independent, unbiased opinion, based on the audit work performed on financial reports to assess the extent to which financial statements meet the perceived need of their users and also to review the accuracy of audit reports. Often, we cannot assure that audit work is free from material misstatement as much of the time, auditors exercise using own judgment and skills. Materiality concept reach at this point, where the error in some amount are too insignificant and it is immaterial in context of financial statement. Audit emphasis is gradually being transformed from the thorough assessment of the...