Role of IT Systems in External Auditing

AUDITING

INTRODUCTION
International Standard on Auditing (ISA) are issued by the International Auditing and Assurance
Standards Board (IAASB) for international use. Such ISAs are revised from time to time so as to
provide auditors with updated standards. IAS 315 deals with auditor's responsibility to find the
risk of material misstatements in the financial books and conduct appropriate audit procedures.
His responsibilities include understanding the client's business and its environment and the kind
of internal control maintains by the entity (Cochran, 2017).

ROLE OF AN EXTERNAL AUDITOR
The responsibilities as stated above can be explained further to understand the role of an external
auditor who are considered as assurance providers more. External auditors play a critical role as
they have the responsibility of approving one's financial statements which would be then served
as the trusted statements to the intended users (Calderon, Song, & Wang, 2016). Potential
investors and lenders require such audited financial statements to base their decision on certain
strong grounds. Failing to detect material misstatements would adversely affect the company as
well as the professional status of an auditor. The dependence of external users creates a pressure
on the auditor as their opinion on the financial statements is considered to be independent and
that the reports are being thoroughly examined (Holtzman, 2013).
The auditor initiates his work through planning after understanding the business, the industry
norms within which such business operates, the efficiency of internal control, the attitude of the
those charged with management, etc. He then formulates the procedures that should be
conducted to carry out his audit work called risk assessment procedures that consists of three
steps, that is, substantive procedures, test of controls and analytical procedures (Johnstone,
2014). He may conduct additional audit procedures and accordingly, collect relevant and reliable
audit evidences. His audit opinion is an opinion based upon such audit evidences.
Being bestowed upon with so much of trust and confidence of stakeholders and general public,
auditors are considered as assurance providers.