As audit firms increasingly rely on proprietary software and automated tools, a new question of independence arises. Auditors must remain independent of their own technology, ensuring they do not blindly accept algorithmic outputs without maintaining professional skepticism.
Mautz and Sharaf introduced eight fundamental assumptions (postulates) that must hold true for an audit to be possible. These include: Financial statements and financial data are verifiable.
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: There is no necessary conflict of interest between the auditor and management. Independence : The auditor acts exclusively in an independent capacity. Auditor Independence : They were among the first to distinguish between independence in fact (a mental state of objectivity) and independence in appearance
Strengths
The authors distinguished between (the auditor's state of mind) and profession independence (the public perception of the discipline). This dual view directly influenced modern regulatory frameworks like the Sarbanes-Oxley Act (SOX). 4. Due Professional Care
While many seek the for academic research or professional exams, its true value lies in how it answers the "why" behind the audit process rather than just the "how". The authors argued that auditing is not merely a subset of accounting, but a distinct field that leans heavily on logic to evaluate evidence and form rational conclusions. Core Concepts and Postulates As audit firms increasingly rely on proprietary software
What constitutes a "true and fair" representation of financial position.
Today, algorithms can analyze 100% of a company’s transactions instantly, replacing traditional statistical sampling. However, Mautz and Sharaf’s theories remind us that data volume does not equal evidence quality. Humans must still evaluate the relevance and trustworthiness of the sources feeding the AI models. These include: Financial statements and financial data are
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is a foundational text that moved auditing from a collection of "rules of thumb" to a rigorous theoretical framework ResearchGate Accessing the Text