Independent auditing of financial statements is one of the best known services that certified public accountants provide; however, it is also the least understood.

Over 47 million investors own shares in more than 14,600 publicly held U.S. companies. Such companies are required to issue financial statements. CPAs are engaged to add credibility to management's financial representations by giving assurance that the financial statements conform to generally accepted accounting principles. The concept of the independent audit has been a key element in the growing number of shareholders willing to invest in the future of this nation's businesses.

CPAs have acquired the expertise to give a professional opinion on the overall fairness of a company's financial statements from having met the following requirements: obtained at least a college degree or its equivalent; passed a rigorous two-and-a-half day national examination; and obtained specific experience to qualify for the CPA certificate and a state license. CPAs are further guided by the accounting profession's basic tenets of independence, objectivity, and integrity.

Before investors or other interested parties can determine how much they are able to rely on the auditor's report, they must first gain a general understanding of what an audit is and what it is not.

What an Audit is Not

  • The financial information upon which the audit is based is prepared not by the auditor, but by management.
  • An auditor does not express a judgment on the competence of management, advise on the desirability of investing in or lending to a company, nor assure that employees are honest and competent.
  • The CPA uses sophisticated testing techniques and professional judgment, within the parameters of established standards, to reach an informed opinion on the overall fairness of the financial statements in accordance with generally accepted accounting principles.
  • Although the purpose of an audit is not to uncover all fraud, the auditor is required to design the audit to provide reasonable assurance that material errors or irregularities that exist in the financial statements are detected.

The CPA as...

The CPA working in...

  • Business and Industry

  • Government and Nonprofits