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An external auditor's work is determined by management. True or False?

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Question added by Frank Mwansa , ACCOUNTING LECTURER , FREELANCER
Date Posted: 2016/02/18
MUHAMMAD ETIMAD SYED
by MUHAMMAD ETIMAD SYED , Senior Financial Accountant , TA'AZ Group of Companies

This statement is FALSE.

 

Scope of work of External Auditors are defined by the Board of Directors and not by the Management of an entity. Management is responsible for the prepartion of financial statement which are subject to audit by the External Auditors. If they define the scope of external auditors there will be a conflict of interest.

Actually, management assign the work to external auditor's instead of determined their work. The services of external auditor's are hired for transparency purpose, in such case, if management herself determine their work than the expected OR expectation of transparency is day dream.

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