The Possibilities and ways of improving audit quality
ENPotential investors, shareholders, governmental institutions and other entities, make their decision on the basis of financial statements. Thus, it is very important, that the users of financial statements should be aware of company’s financial situation, activity results and cash flows, whether the presented financial information corresponds to the data of financial statements. The problem of audit quality is very urgent, because of the difficulties the companies face are not revealed on time the problems become more strained and many cases cause bankruptcies. In different periods of time, the ways to assure audit quality and control were not the same. Up to scandal of “Enron”, which happened in 2001, the assurance of audit quality underwent insignificant regulations. At the beginning of XXI in many countries of the world companies went bankrupt, the reason of which was forgery of financial statements. Responding to such situation international trade unions and governments of different countries took measures to improve the audit quality. However, because of inherent limitations and possibly complicated fraud schemes, the auditor is not able to determine all distortions in financial statements. Reliability of financial statements depends not only on quality of external audit. Financial statements are produced by a legal entity and its responsibility is to give true and fair view of data.Auditor is auditing the final data, which was formed on the basis of former prepared documents. Possibilities of an auditor to check the validity of such documents is limited, and, on the other hand, the auditing practice uses evidences which were collected from different resources and this comparison is not always efficient, because of the lack of some comparable data or because of existence of false data in different sources. If internal and external auditors cooperate, the process of auditing of financial statements can be cheaper and faster. Thus, obligatory cooperation of internal and external auditors should be foreseen. In planning audit, auditors should investigate compliance of accounting policy with standards and peculiarities of legal entity’s activity. Before starting audit, it is important to check its application in producing primary documents, managing accounting and preparing financial statements.
