Auditors Can Bring Trust, Confidence, Reliability to Currently Unaudited Corporate Reporting

Auditors are uniquely qualified to enhance confidence in a wide range of company-prepared information outside financial statements, according the Center for Audit Quality (CAQ).

In a white paper titled The Role of Auditors in Company-Prepared Information: Present and Future, the CAQ describes the role of auditors in various types of publicly disclosed information, as well as how that role is evolving.

“Investors and other market stakeholders increasingly rely on information beyond financial statements to make decisions and assess company value, yet much of this information doesn’t undergo independent review,” says CAQ Executive Director Julie Bell Lindsay. “Employing their critical thinking, skepticism, business knowledge and technical expertise, auditors stand ready to enhance the reliability of corporate information for the benefit of the capital markets, investors and the public.”

Today, the role of auditors is largely limited to the audit of financial statements and audits of internal control over financial reporting (ICFR). However, due to changing business models and investor demand, companies are increasingly providing information that falls outside the purview of traditional audits. This information typically does not undergo the rigor of assurance provided by an auditor, CAQ asserts, so the need for verification, trust and assurance of the information rises.

CAQ says auditors can meet stakeholders’ needs, boosting confidence in the following types of company-prepared information:

  • Non-GAAP financial measures, such as adjusted earnings per share
  • Key performance indicators, such as sales per square foot
  • Environmental, social and governance information, such as sustainability reporting
  • Cybersecurity reporting outside of the financial statements, such as how companies manage cyber-risks
  • Other communications about value-creation outside of financial statements, such as intellectual property

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