REGNRSG 105 Lecture Notes - Lecture 11: Buildon, Audit Risk, Information Asymmetry
Document Summary
Chapter 1 an introduction to assurance and financial statement auditing. Auditing focuses on learning the analytical and logical skills necessary to evaluate the relevance and reliability of financial information, as well as the systems and processes responsible for recording and summarizing that information. Auditing helps ensure that information is understandable, relevant and reliable. Managers serve as agents for the owners (principals = stockholders) and fulfil a stewardship function by managing the corporation"s assets. Information asymmetry: the manager generally has more information about the true" financial position and results of operations of the entity than does the absentee owner. Conflict of interest the manager"s and the absentee owner"s goals may not coincide if both parties seek to maximize their self-interest, the manager may not always act in the best interest of the owner. One primary role of accounting information is to hold the manager accountable to the owner. An assurance analogy: the case of the building surveyor.
