Why Would The Owners Of Lakeside
1. Why would the owners of Lakeside, as well as the company’s banks, require that an annual audit may be made by an independent CPA firm?
Auditing in general, is necessary because of the existence of Information risk or the risk of unreliable information.
Owners of lakeside may own the company but they are not closely involved in managing the business with the exception of Rogers, the only owner involved actively in the business’ day to day operations.
So, an independent audit for non-managing owners provides a trusted second opinion on lakeside’s financial statements and, in turn, gives some, insight as to how well it is being run.
Independent audit in turn makes the financial statements more credible and reliable source of information for both owners and creditors about the managerial efficiency and effectivity of the company’s operations.
Audited financial statements would also help reduce the risk of material misstatement in the financial statements, risk of fraud and misappropriation of assets, as well the risk of inefficient management due to insufficient information on its operations.
Independent audit helps provide credible and reliable information. Creditors requires reliable FS in order to assess the financial status of the company in order to identify its ability to satisfy their claims.
The reason that there needs to be an independent auditor is so that they can remain unbiased. It could potentially make them less independent if they are auditing both Lakeside and the bank in which Lakeside is taking loans from. The auditing firm needs to stay independent in mind and appearance and this may be an issue when auditing both. An independent annual audit can provide credibility to information, and this could be very helpful for decision making. In this specific case, the owner of the Lakeside requires an independent CPA firm to perform an annual audit because the owner wants to show the public a “good-look” of its financial statements; since he would
Auditing in general, is necessary because of the existence of Information risk or the risk of unreliable information.
Owners of lakeside may own the company but they are not closely involved in managing the business with the exception of Rogers, the only owner involved actively in the business’ day to day operations.
So, an independent audit for non-managing owners provides a trusted second opinion on lakeside’s financial statements and, in turn, gives some, insight as to how well it is being run.
Independent audit in turn makes the financial statements more credible and reliable source of information for both owners and creditors about the managerial efficiency and effectivity of the company’s operations.
Audited financial statements would also help reduce the risk of material misstatement in the financial statements, risk of fraud and misappropriation of assets, as well the risk of inefficient management due to insufficient information on its operations.
Independent audit helps provide credible and reliable information. Creditors requires reliable FS in order to assess the financial status of the company in order to identify its ability to satisfy their claims.
The reason that there needs to be an independent auditor is so that they can remain unbiased. It could potentially make them less independent if they are auditing both Lakeside and the bank in which Lakeside is taking loans from. The auditing firm needs to stay independent in mind and appearance and this may be an issue when auditing both. An independent annual audit can provide credibility to information, and this could be very helpful for decision making. In this specific case, the owner of the Lakeside requires an independent CPA firm to perform an annual audit because the owner wants to show the public a “good-look” of its financial statements; since he would