The responsibilities of external auditors are not always well understood, especially
with regard to the detection and reporting of fraud. When external auditors provide
non-audit services to their audit clients, it is essential that the auditors make a clear
distinction between their audit and non-audit responsibilities.
Required:
a) Explain the responsibilities of external auditors to directors and shareholders. (5
marks)
b) Describe the limitations of the external audit in relation to the detection and
reporting of fraud. (5 marks)
c) Explain why it is essential for external auditors to be independent of their clients.
(5 marks)
d) Explain the advantages and disadvantages of external auditors providing
consulting services to their audit clients. (5
marks)