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The Role of Public Accounting in Providing Assurance and Managing User Expectations

Description: A detailed study of public accounting's role in managing user expectations and providing assurance in financial reporting.

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    The Role of Public Accounting in Providing Assurance and Managing User Expectations Week 2 – DQ 1 Why is public accounting often viewed as a guarantor of results, or even as a provider of assurance that one’s investment is of high quality? To what extent is it reasonable to view the auditor as a guarantor? Explain. To what extent do you believe that user expectations of the public accounting profession appear to be unwarranted? Explain. Response #1 I do not think viewing a public accounting or an auditor for that matter as a guarantor of results is fair. Instead, auditors should be viewed as those responsible to plan and perform an audit to obtain reasonable assurance that the financial statements are free from material misstatement. In other words, auditors provided, “Reasonable assurance but not a guarantee that financial statements are free from errors or misstatements. Auditors do not review all financial statement documents, instead they perform the audit on a test basis to gain comfort over the financial statements. Furthermore, auditors do address the quality of an investment, they provide an opinion that the financial statements present to within a material amount the company’s financial results. On the other hand, the extent to which it is reasonable to view the auditor as a guarantor is high. There are some reasons for this, for example, when audits are performed by third party companies who begin the audit process without assertion to how the entity should be operated. Another reason is that they are the only individuals people can trust to provide an accurate description of the company. I do not believe that all users (management, creditor, shareholders, etc.) of the public accounting profession appear unwarranted. I think they all have their own interpretations and purposes of a particular data. Common sense tells me that not everyone view financial reports in the same manner or for the same purpose . Response #2

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