An auditor is not a Valuer, but he is intimately connected with the values. Explain.
It has been rightly said that, An auditor is not a valuer and yet he is intimately concerned with the proper valuation of assets and liabilities. Because Valuation is the basis of verification. Through verification the auditor in his report certifies that the assets shown in the Balance Sheet of the company reveal the true and fair view of the financial position of the company. If the assets are not valued properly, it will affect the Balance Sheet as well as the Profit and Loss Account.
Though the work of valuation is performed either by the managers of the organization or other responsible officers appointed by them but ultimately it is the auditor who checks that valuation has been done on the basis of some scientific principles as the Balance Sheet must represent a true and fair view of the financial state of the business.
In the case of London and Bank it was stated that, “It was no part of auditors duty to value assets and liabilities, yet he must exercise reasonable care and skill in examining the basis of valuation. He should test the correctness of the valuation as shown by the officers of the business. In any case, he cannot carry out the accuracy of the valuation.
In other words the auditor cannot simply pass a value without proper checking and inquiry, as he has to report on the truth and fairness of the financial statements. Hence, it is said that though an auditor is not a valuer, he is intimately concerned with the valuation of the asset. Thus, an auditor has to be very careful in examining the valuation of the asset but he is not a valuer or a technical expert who can estimate the values of the assets which are different in their nature and character.