Problem:
One of the common misconceptions in auditing relates to the difference between accurate and fairly stated. Accuracy implies 100%, which would mean from an audit perspective that the auditor would have to test 100% of the transactions. Well we know that auditing is based upon sampling and that there are materiality limits that are calculated by the auditor as well. Therefore from a professional perspective we use the term fairly stated in all material aspects. This implies that not 100% of the transactions were tested, but rather, there was sufficient evidence found that could support the financial statements as being fairly stated.
This difference is important to understand as it tells you what the objective of a financial statement is and what the client and the general public should expect. Any thoughts on this topic?