What are Qualities of An Auditor? As we know that an auditor is a watchdog means that he appointed to look after the interest of shareholders or owners of the business. A watchdog looks after the property of the owner. It is the qualities of an auditor to protect the property of the owners. He must inform the shareholders when their rights are affected by wrong deeds of management. The auditor must try his best for detecting errors and frauds in order to protect the rights of shareholders. Moreover, an auditor is not a bloodhound. He should not protect management who has been found guilty of committing errors and frauds. He cannot show his favor towards those who are responsible for negligence and manipulation of accounting records. He has the right to report the matter to shareholders in case the management fails to protect rights of shareholders.
In case of International Laboratories Ltd. vs, Dewar it was held that while auditor may be only a watchdog. He will not have performed the function of his office if one how; he retreats under the barn or if he confines his protest to a fellow watchdog. The auditor is not free from liability relating to errors and frauds in the- books of accounts or financial statements. An auditor is a professional accountant so he owes his duty of reasonable care and skill in the conduct of an audit. He must check internal control system then he should start his audit work. He must verify assets and liabilities personally. He must check that financial statements conform to generally accepted accounting principles. In case of any doubt relating error or fraud, he should investigate the matter in depth to clear it.
The standard of audit work has been changed after the case of the McKesson and Robbins in the United States of America in 1938. Now auditor must be present at the time of stocktaking. He can examine whether the procedure followed for stocktaking is proper. If he is not satisfied he can mention the fact in his report. No doubt auditor ‘is not a bloodhound, He cannot loot the property of the business for his personal benefit. He cannot allow management to misuse the property. He must use reasonable skill and care to locate errors and frauds in order to meet the requirements of an audit.
QUALITIES OF AN AUDITOR
The qualities of an auditor may be discussed in two categories;
A. PROFESSIONAL QUALITIES
1. ACCOUNTING: The auditor is an expert in the field of accounting. He knows the principles, methods, and techniques of accounting. It is a process that goes on for the whole year. The accounting system includes personnel, procedures, records, forms, and devices used by any business.
2. AUDITING: The auditor is an expert in the field of auditing. He knows the rules and regulations often audit. He has practical experience in the field of auditing. The auditor knows the checking of financial statements records and performance of any concern.
3. COMPANY LAW: An auditor has full knowledge of Companies Ordinance 11984, Companies Rules 1985, Modaraba Companies Ordinance 1980, Modaraba Companies Rules 1981, and Banking Companies Ordinance 1962, The auditor carry examine the statements in the light of these rules.
4. MERCANTILE LAW: An auditor is an expert in the Mercantile Law. He has complete knowledge of Contract Act 1872, Sales of Goods Act 1930, Negotiable instruments Act 1881, Partnership Act 1932, Insolvency Act, Transfer of Property Act and Common Carrier Act.
5. TAXATION LAWS: The knowledge of taxation is essential for professional auditor. He knows Income Tax Ordinance.2001, Sales Tax Act, Gift Tax Act, Excise, and Customs Act, He knows the rates of Tax.
6. BUSINESS ORGANIZATION AND OPERATION: The auditor must know organization structure and operations of the business. Placement of Workers on the job is organizational structure. He should know the working of various departments of the business.
7. BUDGET PREPARATION: The auditor must be expert in preparing budgets. The figures are collected from past year. The estimates are established for the next year. The various budgets are prepared for all functions of the business concern.
8. ELECTRONIC DATA PROCESSING: The auditor must be expert in electronic data processing. The computers are used in business for accounting and other functions. The auditor must have the training to handle data through computers.
9. GENERAL KNOWLEDGE: The auditor must have knowledge of general’ science. He must be aware of economic and political conditions. He should remain in touch with the latest knowledge affecting business concerns.
B. PERSONAL QUALITIES
1. TACT: The auditor needs technical information to comment and criticize policies of management. When any information is missing he can collect such information with argument and debate without offending them.
2. HONESTY: The auditor must have high moral standards. It’ is his duty to report true and fair view of business matters. He must be straightforward, and honest in his professional work.
3. INDEPENDENCE: The auditor must be independent at the time of programming, investigation, and reporting. Other people do not influence him directly or indirectly.
4. VIGILANCE: The auditor is Vigilant about activities of accounting and audit staff. He can discover errors and frauds due to vigilance. He has an alert mind to watch audit work.
5. JUDGMENT: The auditor must have judgment for Selection depreciation, provision for bad debts, and inventory can apply professional knowledge to make decisions.
6. LEADERSHIP: The auditor is a leader of an audit team. The senior and junior audit clerks are working under his leadership- As team leader, he can guide the auditors through demonstration.