Role of Auditor the Role Essay

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This is because auditors have a high amount of expertise in analyzing financial statements, with particular focus on being able to determine when fraud has potentially taken place. The forensic accounting capabilities of auditors are then put to work, to ensure that fraud has not taken place. The participants in free markets benefit from this work because it reduces the risk associated with their investments. Over time, this reduced risk will encourage more money into the markets, as the markets are viewed as a safe place for capital.

Recent developments have resulted in the role of the auditor evolving. The Center for Audit Quality (n.d.) has noted that where auditors used to basically have a "pass-fail" orientation to financial statements, this is now the bare minimum and a higher standard of care is to be taken in auditing reports.

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Auditors have become involved in creating annual reports that meet the needs of today's investors, and that auditing is a function that should apply to all financial releases, not just annual reports. Auditors are also recommended to have input into the accounting policies that management has selected for the firm, and to have input into other policies such as the types of releases and the information that those releases contain. As the needs of financial markets evolve, the contribution that auditors make to ensuring the transparency of financial markets has also evolved. Auditors are now taking a more proactive role in how a firm presents its financial condition to the public, and this role is critical to ensuring functioning free markets.

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