Auditing failures

Does audit failure reduce audit shirking?

There is also evidence that larger penalties for audit failure result in higher audit fees and overinvestment in audit effort and that increased liability decreases audit failure and reduces auditor shirking

A related objective of this paper is to shed light on audit failure by Big N and non-Big N auditors separately

What are the most common problems auditors identify?

Most of the findings auditors identify stem from documentation failures

Luckily, this is easy to correct: companies should document what they’re doing in written policies, ensure everyone is trained in the proper procedures, and create a paper trail of the performance of the controls

Human error compounded by too many manual processes

What is audit failure?

Audit failure is when an independent auditor expresses an incorrect opinion of a company’s financial statements

This means that the auditor needs to identify errors in the financial statements, leading to an inaccurate representation of the financial position and performance of the company

×Audit failure occurs when an independent auditor expresses an incorrect opinion of a company’s financial statements. Audit failures can be caused by:

Inadequate auditor training
Failure to exercise sufficient professional skepticism in evaluating management representations
Not sufficiently evaluating client valuation estimates
Essentially not engaging in any auditing activities at all
Creating inadequate audit documentation
Digressing from the relevant professional standards in such a way that the opinion contained in his or her audit report is incorrect
Poor prioritization from the top
Lack of documentation
Human error compounded by too many manual processes
Weak or missing risk assessment
Internal assessment too self-congratulatory
Misunderstanding that some audits are ongoing not point-in-time

This is a list of bridge failures.