The characteristics of a valuable audit
The value of an audit arises only where the following two necessary conditions
are met. That is, where the audit is competent and independent of auditee
management. If an audit is not undertaken competently, then it is not of value
to users. If an audit is undertaken competently but not independent of management,
then the representations made are nothing more than the original views
of management. In either case the audit does not lower information risk and
would not be valued by the market for information.
The existence of both competency and independence are necessary conditions
for the audit to be a value-adding good; one cannot be a substitute for the other.
CA Ramachandran Mahadevan,M.Com.,F.C.A.,
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