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The forensic accounting capabilities of auditors are then put to work, to ensure that fraud has not taken place. The participants in free markets benefit from this work because it reduces the risk associated with their investments. Over time, this reduced risk will encourage more money into the markets, as the markets are viewed as a safe place for capital.
Recent developments have resulted in the role of the auditor evolving. The Center for Audit Quality (n.d.) has noted that where auditors used to basically have a "pass-fail" orientation to financial statements, this is now the bare minimum and a higher standard of care is to be taken in auditing reports. Auditors have become involved in creating annual reports that meet the needs of today's investors, and that auditing is a function that should apply to all financial releases, not just annual reports. Auditors are also recommended to have input...
As the needs of financial markets evolve, the contribution that auditors make to ensuring the transparency of financial markets has also evolved. Auditors are now taking a more proactive role in how a firm presents its financial condition to the public, and this role is critical to ensuring functioning free markets.
Works Cited:
Center for Audit Quality (no date). Observations on the evolving role of the auditor. Center for Audit Quality. Retrieved June 30, 2012 from http://www.thecaq.org/publications/EvolvingRoleoftheAuditor.pdf
Johnson, S. (2010). What is the auditor's role in finding fraud? CFO Magazine. Retrieved June 30, 2012 from http://www.cfo.com/article.cfm/14490470/
Works Cited:
Center for Audit Quality (no date). Observations on the evolving role of the auditor. Center for Audit Quality. Retrieved June 30, 2012 from http://www.thecaq.org/publications/EvolvingRoleoftheAuditor.pdf
Johnson, S. (2010). What is the auditor's role in finding fraud? CFO Magazine. Retrieved June 30, 2012 from http://www.cfo.com/article.cfm/14490470/
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