The Third Edition of this successful text includes extensive changes, based on feedback from students and lecturers. There is a discussion of auditing and the law beyond the issue of third-party liability; and more coverage of recent developments in audit methodologies and techniques. New chapters include a survey of developments in audit automation, a discussion of the nature and development of the audit market, both in the United Kingdom and the European Union, and an assessment of the impact on auditing of the Cadbury Report on corporate governance, with particular attention to the role of audit committees. Each chapter includes questions for discussion.
All men are liable to error; and most men are, in many points, by passion or interest, under temptation to it.
At the heart of the audit process is a belief about human nature. Human beings will speak the truth, unless there is sufficient to be gained by being dishonest. As the managers of an organization are assumed to be able to benefit personally from reporting dishonestly in their organization's published financial statements, there is a presumption that managers will tend to manipulate the financial statements so as to make their performance look better than it actually is. In contrast, auditors are assumed to have no incentive to be dishonest. They are presumed ...