Financial reporting refers to how an accountant should report to people outside the business about the financial occurrences of that business. It is an approach where accountants explain the accounts in a more comprehensive way. Therefore, it is right that financial reporting should follow certain auditing standards, internally or externally. It should, of course, follow the general auditing standards set by auditing institutions. The general standards can be enumerated as the following:
- Auditing must be performed by qualified and certified auditors. Auditors should be the ones responsible doing the audits and are responsible also for its reporting. Financial auditors are the specific auditors adequately trained and technically proficient for financial reporting.
- An independent opinion must be maintained by the auditor or auditors who are related to a specific auditing work. The financial report done by the auditor must not be influenced by external parties affecting the accuracy and reliability of the financial report. Moreover, the financial auditors must be able to make a firm stand on their report when disputes occur.
- Professionalism must be exercised by the financial auditors at all times particularly during the performance of their duty and their presentation and preparation of the financial report. As certified auditors, they must act accordingly because it is expected that they are the qualified professionals in the field of auditing.
- The prepared and presented financial report must state that the financial statements included are done in accordance within general established auditing and accounting principles and values. It is the responsibility of the financial auditors to provide truthful and just financial statements according to accurate information of accounts and other financial data.
- The prepared and presented financial report must identify when such values and principles are not observed in the present period in relation to the previous period. To avoid discrepancies, disputes and confusion, it is the financial auditors' responsibility to state clearly which unconventional principles and methods are done to get preferential data.
- It is important that informative disclosures should be included by the financial auditors in the financial report. Otherwise stated in the report, the informative disclosures included in the reports will be regarded as rationally sufficient. For the sake of the truthfulness of the report, it is the auditor's discretion to include such informative disclosures.
- The report can contain either a manifestation of opinion concerning the financial statements taken collectively or a declaration that such opinion can't be articulated. If an overall opinion or conclusion cannot be made, an explanation should be clearly indicated in the report.
These general auditing standards for financial reporting gives a useful structure for determining the quality of the financial auditors' expert performance concerning audit assessment and report. However, financial auditors must take these in mind to prevent minimum auditing. Minimum auditing is considered as one of the deadly sins in financial reporting. This sin may be forgivable for business managers because they treat audits as value consuming for their business activities. But for financial auditors, minimum auditing is unfortunately a prevalent sin - and unforgivable.