In a financial statement audit, the auditor maintains professional relationships with four important groups: (1) management, (2)stockholders (3) the board of directors and audit committee. All of these independent auditor relationships are discussed below:
Independent auditor relationships
Management: In an auditing context, management refers to the company officers, controller, and key supervisory personnel. During the course of the audit, there is extensive interaction between the auditor and management. To obtain the audit evidence, the auditor often requires confidential data about; the entity. It is, therefore, imperative to have a relationship based on mutual trust and respect.
Shareholders: Shareholders are the owners of the company. The auditor is supposed to work in the best interest of the shareholders. So, there should be a good relationship between the auditor and the shareholders.
Board of Directors and Audit Committee: The board of directors of a corporation is responsible for seeing that the corporation is operated in the best interest of the stockholders. The auditor’s relationship with the directors depends largely on the composition of the board. When the board consists primarily of company officers, the auditor’s relationship with the board and management is essentially .one and the same. However, when the board has a number of outside members, a different relationship is possible. The board can help the auditor in providing necessary information relating to the operation of the entity.
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