ICATT boss: Role of auditor is not to detect fraud

President of the Institute of Chartered Accountants of Trinidad and Tobago (ICATT), Derek Mohammed, says the role of the auditor is not to detect fraud but to “express an opinion on the financial statement.” ICATT was established by an Act of Parliament in 1970 and has a membership of approximately 1,200 active members who are subject to “an ethical code of integrity, objectivity, professional competence, confidentiality and professional behaviour.”

Mohammed’s statement comes on the heels of Tuesday’s testimony of PricewaterhouseCoopers’ (PwC), Tertitory Senior Partner, Colin Wharfe, at the Eleventh Evidence Hearing of the Sir Anthony Colman Commission of Enquiry into the collapse of CL Financial and the Hindu Credit Union (HCU), where Wharfe stated categorically, during his testimony, that “business failure doesn’t equate audit failure.”

Mohammed said: “People need to understand that our role as auditors is to express an opinion on the financial statements and disclosures made on the financial statements.”

He explained that the role and responsibilities of the auditor, within the context of an adherence to generally accepted auditing standards and in compliance with the International Financial Reporting Standards (IFRS), is to design appropriate auditing procedures for risk assessment and to test the effectiveness of internal controls and substantive audit procedures to afford a reasonable basis of an opinion regarding the financial statements.

“When you conduct an audit you design procedures on an auditor’s judgment. You are making an assessment based on professional judgment of where there will be risk. All these procedures are based on sample testing. It is impossible to test one hundred percent,” Mohammed said. “Professional judgment,” he added, “is based on experience and industry knowledge.”

Chairman of Aegis Business Solutions Ltd and an auditor for the last four decades, Angela Lee Loy, agreed with Mohammed. “Our role is to review the system and examine that there are enough controls to reflect a true and fair view of the financial affairs of the company. We are not going in there to find fraud. We come up with an assessment based on our sampling, judgment and risk controls.”