University: Is Auditing Necessary for Effective Financial Reporting?

This essay argues that auditing is indeed necessary for effective financial reporting. It highlights that auditing, when performed by a certified public accountant (CPA), provides an outlook on the fairness of a business enterprise's financial statements, which is crucial for the investment community. The essay emphasizes the auditor's role in evaluating cash flow, liabilities, and assets, ensuring the accuracy and reliability of financial information. Failure to conduct effective audits can lead to a loss of faith from financiers and creditors, hindering a company's ability to secure funding and progress with future projects. Regular analysis through auditing helps businesses ascertain the effectiveness of their processes and achieve their objectives, underscoring the importance of auditing in maintaining financial integrity and attracting capital.

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University Name
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Authors’ Note

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Unfortunately, auditing is not necessary for effective financial reporting. Do you agree with
this statement?
As suggested by Rezaee et al., (2018), auditing can be illustrated as the process of assessment
of accounting documents of a business entity's accounting records, along with physical
scrutiny of its resources. In case if the same is executed by a certified public accountant (also
referred to as CPA), then the certified accountant can necessarily express an outlook regarding
fairness of financial statements of the business enterprise. In essence, this viewpoint is
thereafter issued together with the financial assertions to the entire investment community of
the firm (De Vlaminck & Sarens, 2015). So, when presented with the assertion that “auditing
is not necessary for effective financial reporting”, I would hereby like to express my
disagreement with this assertion. Further, main task of an assessor is to carry out
comprehensive evaluation of both in-flow as well as outward stream of cash, the entire
amounts that the business unit owes and overall worth of assets or else resources possessed
by the corporation. Also, assessors review and check the overall worth of assets of the
business concern at the time when assets were obtained, their optimal usage and fine points of
tax disbursement by the business concern (Rezaee et al., 2018). Therefore, in case if an
assessor fails to carry out the job effectually, outsiders such as financiers, creditors plus other
users of the financial information can lose faith and doubt authenticity of the overall financial
statements. Therefore, this is also imperative in luring financiers as well as lenders who bring
finances to the corporation for upcoming projects. Also, for a business concern to ascertain if
its processes are effectual, they need to ne analyse at a regular basis to make certain that the
results are what the corporation wants and needs to progress and acquire capital. De
Vlaminck & Sarens (2015) illustrates that the way management of the company is concerned
about overall integrity as well as reliability of the financial assertions designed by the system

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of accounting information. Business concerns are worried about reliability of these reports as
they and reflect whether the business is attaining business objectives.

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References
De Vlaminck, N., & Sarens, G. (2015). The Relationship Between Audit Committee
Characteristics And Financial Statement Quality: Evidence From Belgium. Journal Of
Management & Governance, 19(1), 145-166.
Rezaee, Z., Sharbatoghlie, A., Elam, R., & Mcmickle, P. L. (2018). Continuous Auditing:
Building Automated Auditing Capability. In Continuous Auditing: Theory And
Application (Pp. 169-190). Emerald Publishing Limited.