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Explain the reasons why an auditor is not required to carry out a complete check of all the transactions and balances of a business

      

Explain the reasons why an auditor is not required to carry out a complete check of all the transactions and balances of a business

  

Answers


Wilfred
i) Economic
The cost in terms of expensive audit resources would be prohibitive which will inflate audit fees
ii) Time
The complete check would take so long that the client may receive audit reports on matters which are outdated
iii) Practical reasons
Users of accounts do not expect 100% accuracy. The auditor will only focus on material areas.
iv) Psychological
A complete check would be tiresome to audit staff who may then not carry out an effective and efficient audit
v) Fruitless/End results
A complete check would not add much to worth of figures if as would be normal a few amounts were discovered. This emphasis in auditing should be on the completeness of record and true and fair view.
vi) Large volume of transactions
For large business with voluminous transactions, it is necessary for auditor to sample since not all transactions can be audited. Full testing would not achieve the specified audit objectives for an area e.g. full testing on sales invoices would not verify all sales are recorded (it may not demonstrate completeness) nor would it deal with human error on the part of the auditor
Wilfykil answered the question on February 23, 2019 at 06:45


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