Auditing: Importance, Benefits, and Responsibilities

Running head: AUDITING
Auditing
Name of the Student
Name of the University
Author’s Note

1AUDITING
Table of Contents
Requirement 1............................................................................................................................2
Answer to [a]..........................................................................................................................2
Answer to [b]..........................................................................................................................2
Requirement 2............................................................................................................................2
Requirement 3............................................................................................................................3
Answer to [a]..........................................................................................................................3
Answer to [b]..........................................................................................................................4
Requirement 4............................................................................................................................4
Requirement 5............................................................................................................................5
Requirement 6............................................................................................................................6
Answer to [a]..........................................................................................................................6
Answer to [b]..........................................................................................................................6
References..................................................................................................................................8

2AUDITING
Requirement 1
Answer to [a]
Audit Expectation Gap refers to the variance between the expected audit performance
and the actual audit performance. Compound nature of audit operations along with the
conflicting and complicated role of auditors is the main reason behind the occurrence of audit
expectation gap (Ruhnke and Schmidt 2014). Auditors are responsible for obtaining the
required audit evidences to determine the truthfulness and credibility of the financial
statements and to ensure that the financial statements are prepared in accordance with the
required standards. Thus, considering the audit expectation gap, the shareholders’ concern in
EML is valid and justified due to the failure of the auditors in ascertaining the accuracy of the
financial statements.
Answer to [b]
The required action for the Board of Directors of EML is the alteration of the present
auditors with new auditors for accurately address the shareholders’ concern. In addition, the
Board of Directors of EML have the option for issuing an expanded audit report for making
the users of the financial statements know about the responsibilities of the auditors and
growing responsibilities of the auditors in fraudulent activities so that auditor’s independence
can be strengthen (Otalor 2013).
Requirement 2
The benefits are discussed below:
 Audited financial statements of EML will contain the correct financial information
that is needed for profit maximization; and both EML and the users of the financial
statements can become majorly beneficial from increased profitability.