postulates of auditing

postulates of auditing
Theoretical principles and assumptions that purport to define the basis of auditing. *Robert Khun Mautz and Hussein A. Sharaf elaborated eight "tentative" postulates of auditing in *The Philosophy of Auditing (1961, Chapter 3):
1. *Financial statements and *financial data are verifiable.
2. There is no necessary *conflict of interest between the auditor and the *management of the enterprise under audit. 3. The financial statements and other information submitted for Verification are free from *collusive and other unusual irregularities. 4. The existence of a satisfactory system of *internal control eliminates the *probability of irregularities. 5. Consistent application of generally accepted principles of accounting results in the *fair presentation of *financial position and the results of operations. 6. In the absence of clear evidence to the contrary, what has held true in the past for the enterprise under examination will hold true in the future. 7. When examining financial data for the purpose of expressing an independent opinion thereon, the auditor acts exclusively in the capacity of an auditor. 8. The *professional status of the independent auditor imposes commensurate professional obligations. Mautz and Sharaf’s postulates were developed in the context of external auditing, and have been debated and criticized at length, not least by critics of some of the postulates’ apparently "optimistic" nature. Some theorists (e.g., Flint, 1988, and Lee, 1993) have attempted to develop and refine the postulates. Nearly half a century after their formulation, however, the postulates remain highly relevant: For example, postulates 7 and 8 go to the heart of concerns over the independence of external auditors, a topic that has dominated *corporate governance following the demise of *Enron in 2001 and that of the auditing firm *Arthur Andersen in 2002. Further reading: Mautz and Sharaf (1961)

Auditor's dictionary. 2014.

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  • Philosophy of Auditing, The — A landmark study of auditing’s theoretical underpinnings. Coauthored by *Robert Khun Mautz and Hussein A. Sharaf, and published by the *American Accounting Association, The Philosophy of Auditing first appeared in 1961. Among the book’s… …   Auditor's dictionary

  • Mautz, Robert Khun — born 1915 A U.S. academic, author, and specialist in auditing and accounting. Professor Mautz coauthored *The Philosophy of Auditing, a landmark book of 1961 that set out the famous *postulates of auditing. Mautz’s career has involved both… …   Auditor's dictionary

  • auditability — The feasibility of undertaking auditing procedures. Auditability is the first of the *postulates of auditing elaborated by *Robert Khun Mautz and Hussein A. Sharaf: It is, in effect, the prerequisite to auditing. If all the records of a… …   Auditor's dictionary

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  • audit assumption — A presumption or judgment that underpins an audit or an *audit test. Unlike *postulates of auditing, which are of general validity, an audit assumption is specific to an auditing assignment. Examples of audit assumptions include the judgment that …   Auditor's dictionary

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  • irregularity — An inaccuracy mistake, or occurrence outside normal patterns. An irregularity can be either intentional (as in a *fraud) or unintentional (as in an *error), but the term is perhaps loaded toward matters arising from intent. Two of the *postulates …   Auditor's dictionary

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