Monetary audits are usually performed by firms of practicing accountants who are experts in monetary reporting. As soon as the auditor has obtained sufficient proof and performed enough verification then he or she will draw a conclusion as to regardless of whether the monetary statements are, in all material respects, pretty presented in accordance with commonly accepted accounting principles.
If the auditor concludes they are then he or she will problem an opinion with no reservation If, in the auditors opinion, the assertions are not in accordance with GAAP then the auditors report will state this, indicate what the variations are and, if probable, quantify the monetary impact on the statements.
Nevertheless, if the auditor, in the course of an audit, does uncover evidence of fraud or evidence indicating that a fraud could exist then the auditor would expand his/her verification procedures to identify irrespective of whether a fraud has occurred and has developed a misstatement in the financial statements.
Though this explanation is drastically simplified and applies only to the audit of economic statements, it is significant to comprehend that a appropriate audit is rigorous and involves an exhaustive quantity of procedures and processes which are summarised beneath to form what is known as an audit opinion.
A misstatement in economic statements would be regarded material if a person with a reasonable expertise of the small business and its financial activities would have reached a distinct opinion about the organization had he or she received a set of economic statements correcting for the material misstatement.