Final answer:
The final step in the audit process, after evaluating evidence and misstatements, is to prepare and issue the independent auditor's report. The auditing firm's role solidifies corporate governance by certifying financial statements and contributing to the information provided to shareholders and other investors. This process is critical to ensure transparency and accuracy, as demonstrated by the failure in the case of Lehman Brothers. Option A) The final step is to prepare and issue the independent auditor's report is the correct answer.
Step-by-step explanation:
Corporate governance is a critical aspect of a company's structure and operation. The board of directors, elected by the shareholders, is responsible for overseeing the company's top executives, representing the first line of defense in corporate governance. An auditing firm plays a second institution of corporate governance, tasked with reviewing the company's financial records to ensure accuracy and reliability. These firms issue an independent auditor's report after gathering sufficient, appropriate audit evidence and communicating with those charged with governance. When discussing the completion of an audit, it's crucial to know the final step in the process. After evaluating all evidence and communications, the final step is to prepare and issue the independent auditor's report (Option A), which encompasses the audit's findings and the financial statements' overall fairness.
When a company hires an auditing firm, this firm not only certifies the company's financial statements but also ensures that shareholders and other stakeholders, referred to as the third institution of corporate governance, receive accurate financial information. This was notably absent in the case of Lehman Brothers, where corporate governance failed, resulting in inaccurate financial information being distributed.
For clarity, the remaining options, such as consulting with the client's legal counsel, sending the report to the internal audit function, or sending it to the SEC are not typically the final steps in the audit process. Therefore, mention the correct option in the final answer, which in this case is Option A: The final step is to prepare and issue the independent auditor's report.