Clifton Gunderson LLP - A nationwide firm of Certified Public Accountants and Consultants

July 2011

Posted July 8, 2011

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Great Expectations and Deep Pockets: Five Misperceptions About Auditors As Perceived By the Legal Community

A large chasm exists between the expectations and perceptions of the legal community about an auditor's responsibilities and the realities of what auditors do. This divide is damaging to the accounting profession and, ultimately, to the business community as a whole.

Misunderstanding leads to:

• Dissatisfaction with services
• Needless investigations and lawsuits
• Erroneous and costly decisions by judges and juries
• Damage to the reputation of auditors as honest and competent professionals

Here are five of the most common misperceptions about auditors that surface over and over in the legal community. Click on each for an in-depth discussion on its origins and impact, followed by some suggestions on how to close the gap.

• Misperception # 1 — Financial statements are prepared by the auditor, so they are the auditor's financial statements.
• Misperception #2 — Auditors "certify" or "guarantee" financial statements.
• Misperception #3 — If financial fraud has been committed by company personnel, the auditors will detect it.
• Misperception #4 — Business failures equal auditing failures.
• Misperception #5 — Courts should treat auditing like other professions in assessments of damages.
• Some Possible Solutions