“Message to all Auditors……you were not hired to be human lie-detectors relying entirely on what you are told by company personnel. Your job is to acquire and review audit evidence in an objective and independent manner and sufficiently verify that the information supports your audit objective for a particular procedure. Any auditor who trusts without sufficient verification is, quite simply, an auditor not doing his or her job. It’s really that simple.”
Thomas W. Golden
We owe the expression Trust but Verify to Pres. Ronald Reagan, who used it during the Cold War to define the U.S. position on missile systems inspection. Trust but Verify should be the credo of all auditors as they perform their duty of ensuring that the information disseminated by management properly depicts the financial condition of the company being audited. We all know what trust means, but the word verify may need clarification.
We can start with its definition. Merriam-Webster defines verify as a verb that means to confirm or substantiate; to establish the truth, accuracy, or reality of. Defined in this way, the word is not a specific term of art in the world of auditing. Instead, we refer to the process of verification in terms of ascertaining the completeness, accuracy and validity of a transaction, of groups of transactions, or of balances.
Verification is the means by which an auditor gathers sufficient audit evidence. Requiring such audit evidence does not mean that the auditor does not Trust the client. Auditors cannot in all reasonableness mistrust their clients. If clients were not trusted, they would not be clients for very long. However, the auditor’s trust should be supported by whatever processes of verification are appropriate under given circumstances. An auditor who adheres to the practice of trusting with verification should not rely on the presumed character of any individual who creates a transaction or has responsibility for an important control function without ascertaining, on an independent and objective basis, the accuracy, validity, and completeness of the matter under review.