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I think the last bullet point on this list should be first. Before auditors deem an audit satisfactory, observations should be made regarding management's assertions, controls, etc... http://governancefocus.blogspot.com/2008_12_01_archive.html.
One key aspect of auditing is consulting with management about their assertions regarding the controls and financial statements. Managers oversee the majority of activities that occur within the organization, and provide valuable information to auditors in regards to the business. Nevertheless, auditors should always follow up on management’s assertions. Auditors are like investigators; they gather as much information as possible, and then do the research on that information to verify or reject it. All too often, auditors trust management with their assertions and do not follow up on them. This could be from laziness, time constraints, or over-trustworthiness of the auditor. In the article titled "Accounting Board Criticizes Deloitte's Auditing System", Floyd Norris observes the Public Company Accounting Oversight Board's assertion that Deloitte and Touche, a Big 4 accounting firm, has a flawed system for conducting audits. The PCAOB reports that Deloitte relies too much on management's claims and assertions, rather than actually performing the appropriate audit or reviewing accounting standards. A 2008 inspection of Deloitte, who audits major nation-wide companies, revealed that 27 of the 61 audits contained errors. Another report in 2010 revealed 15 errors, which were directly related to quality control, meaning the audit team did not follow up on management's assertions. Norris points out that the board can take disciplinary actions against firms and individual partners for not complying with standards, but Sarbanes-Oaxley requires these claims to be kept confidential until they are completely resolved. Norris notes the board's statement that says, "Deloitte auditors did not bother to even consider whether accounting decisions made by companies were consistent with accounting rules. Instead, auditors accepted management assertions that the accounting was proper." (Norris, 2011) The board's point is that the auditors relied too heavily on management's words, rather than using proper quality control measures. Auditors' responsibilities are to consult with management, but follow up on the assertions. Managers aspire to be honest to outside parties, but ultimately want to protect their company. False assertions from management could be intentional in order to safeguard the company and their job. They could also be unintentional due to managers overlooking minute details within the big picture. These are both reasons for auditors to follow up on all of management’s statements in order to perform a complete and effective audit.