18 February 2019

Audit: audit accounting accounts or audit the business?

In a global world like the present one, it is not easy to develop a theory regarding what is the current status of the work of the external auditor of financial information in different countries and what should be its future focus.

Different studies by respected professionals in the area have emphasized the gap that exists between what the auditor defines as his responsibility in terms of his audit report of the evaluated financial statements and the expectations of the different stakeholders: shareholders, employees, financing institutions, regulatory entities and others. Different financial scandals that have occurred in the last ten years prove this, with obvious damage to the public reputation of the auditors who have been linked to such events. Proof of this is that more and more forensic expertise is requested to identify those responsible - managers and auditors of companies - to support the presentation of legal actions on them.

It is clear that the future must have greater consensus between the entities to be audited and the auditor. The first, to strengthen their management control tools and internal processes and the second, to develop audit risk assessment procedures that allow you to reduce the impact of material deviations in the presentation of company information.

The auditor must, necessarily, incorporate into its work approach other disciplines, such as systems audit resources, expert professionals in business evaluation, tax advisors, legal and others related to the activity of each audited company. In summary, to audit the balance sheet accounts to "audit the business", to understand how their activity is reflected in the audited financial information.

Many times the auditor prioritizes auditing the accounts of the statement of situation, when in reality the heart of the business and rhythm of its activity is in the generation of results. The auditor should then aim to evaluate the way in which the management adds value to the company and consequently to its shareholders. 

Waldo Catalán, Audit Partner Auren Chile

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