ROLES OF AUDITORS IN INVESTMENT ANALYSIS

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Role of auditors in investment analysis is one aspect of fundamental analysis and business valuation that the savvy investment gurus have long ago recognised and has reaped fortune from it. Your investment appraisal will be incomplete if you fail to recognise the role played by auditors in the whole process of analysing your investment.
The traditional role of auditors is to express professional opinion on a set of prepared financial statements. What this means is that third parties rely on the audited information to make investment decisions as the main reason why we audit financial statements is to give it some credibility. There has been series of debate surrounding auditor’s liability and audited company accounts. The current stance of the law is that auditors can be exonerated from material misstatements in the accounts if it can be proven that professional care and due diligence are the basis of the audit procedures.
Notwithstanding the above, the role of auditors in investment analysis still cannot be over emphasised. This article is written to discuss the important roles of auditors in whole process of investment analysis. The roles of auditors in investment analysis will be looked at from two perspectives.
AS A CONSULTANT
As a consultant, the auditor who in most cases acts as information systems auditor is bestowed with the responsibility of evaluating the overall systems in the organization- paying particular attention to the robustness of the internal control system. A vital element of investment analysis is to enquire into the security of the initial investment. Auditors provide useful information regarding the controls in a company. An investor would not in his or her right senses make stake on an investment that is highly vulnerable and liable to collapse due to bad internal control. Auditors in organization advice management on the best ways to reduce risk (both at the strategic and operational levels) so as to improve efficiency thereby increasing the financial and operational value of an investment.
The auditor bridges the credibility gap that exists between providers of funds and users of funds.
TRADITIONAL ROLES OF AUDITORS
As a statutory auditor
Ensure compliance
Advice management
Boost the confidence of the general public
Express professional opinion

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by Chinweike Okwuduche V
8 months ago

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ROLES OF AUDITORS IN INVESTMENT ANALYSIS

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