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5:00The Audit: What Auditors Actually Do (and Don't)
Everyone thinks the auditor signs off that "the numbers are true." They don't. They promise something far narrower, and the gap between what they promise and what you assume is exactly where Enron and Wirecard happened.
An external audit is not a guarantee that the accounts are correct, that the company is healthy, or that no fraud exists. Under ISA 200, the auditor gives reasonable assurance, a high but not absolute level, that the financial statements *as a whole* are free from material misstatement, whether caused by fraud or error. "Reasonable" and "material" are the two words that carry all the weight, and almost nobody outside the profession reads them.
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