Why do auditors only provide reasonable assurance that financial statements are fairly

started ?

⇨ Given the inherent limitations of the audit process, auditors aim to provide reasonable
assurance rather than absolute assurance due to its near impossibility to achieve.
Nature of financial reporting: Accounting is inherently subjective, so financial
statements must rely on management’s best estimates, judgments, and assumptions.
Due to the presence of these subjective factors, complete certainty is impossible to
achieve. For example, reporting the amount of cash that will be collected from a large
group of accounts receivable is simply a carefully considered guess. It is presented
according to U.S. GAAP but it is still an estimate.
Inherent limitations of accounting systems: Accounting systems have their own
inherent limitations; for example, errors or misstatements can occur that go
undetected during an audit if the system isn’t foolproof.
Fraud and collusion: Even with proper professional care and skepticism, it may be
difficult for auditors to uncover fraud or collusion if it has been well-hidden among
employees. Independent auditor visits a company for a few weeks or months each
year to carry out testing procedures. Company officials who want to hide financial
problems are sometimes successful at concealment. Auditors can never be completely
certain that they have not been victimized by an elaborate camouflage scheme
perpetrated by management. Thus, they are not comfortable providing absolute
assurance.
Sampling: Instead of looking at every single transaction, balance, or control, auditors
will use sampling methods to test them. The auditors may miss some important errors
or misstatements if they take this approach.