Audit Policy Paper

In: Business and Management

Submitted By msennett3
Words 2151
Pages 9
Mandatory Auditor Rotation Policy

Through the course of an audit, auditors are constantly faced with pressure from the client regarding financial reporting and other issues that may arise. Clients can threaten to terminate the auditor, resulting in lost fees and tarnished reputations as the firm tries to pursue future clients. In these cases, partner evaluations can be negatively affected since they are judged based on hours billed and the number of clients they are able to secure. Mandatory auditor rotation is defined as the obligation to limit the number of years during which the accounting firm may be the auditor of record for a client. The Public Company Accounting Oversight Board (PCAOB) is a strong advocate in favor of mandatory auditor rotation, while a majority of accounting firms are opposed to the idea. Problems are more likely to develop in the initial years of the audit relationship (fraud and bankruptcy) when the auditor tries to gain as much knowledge as possible about the client. According to an American Institute of Certified Public Accountants (AICPA) study (Church and Zhang 2006, page 3), audit failures are three times more likely to occur in the first two years of the auditor-client engagement. Auditor rotations have never been mandated in the United States, and I believe this should continue in the future due to the high costs and decreased auditor effectiveness that would result from continual changes in the auditor-client relationships. There are a number of reasons the PCAOB is in favor of mandatory auditor rotation. For example, PCAOB Chairman James Doty believes we should look at ways to protect auditor independence by considering a term limit on how long an auditor’s relationship with a client may last (Tysiac 2012, page 1). The PCAOB wants to consider the concept further by releasing a proposal and receiving feedback whether…...

Similar Documents

Policy Paper

...------------------------------------------------- Policy Paper, spring 2012 ------------------------------------------------- Is a Greek exit from the European Union inevitable? 0909512 Table of Contents Pg. List of Illustrations 3 Executive Summary 4 1.0 Introduction 5 2.0 The Economic Cost and Benefit for State Membership of the EMU 5 2.1 Benefits of EMU Membership & Mechanisms 5 2.2 Costs of EMU Membership 7 3.0 Contextual Factors: The Profusion of Dept 10 3.1 The Eurozone Crisis 10 3.3 Greece- The Forefront of the Euro Area Crisis 13 4.0 Alternate Policies and the Effective Consequences 15 4.1 Predicament 15 4.2 Abetting Dependent on Austerity 16 4.3 Creditor-Led Default 17 4.4 Debtor-led Default and Greek Haircuts 19 4.5 Greek Exit 20 5.0 Recommendation 21 Appendices: Appendix 1: Preferential liberalization References List of Illustrations Pg. Illustration 1: The cost of EMU- Diminishing Domestic Flexibility to Asymmetric Macro Shocks 7 Illustration 2: Cost and benefit of Monetary Unions 9 Illustration 3: Evolution of Nominal Unit Labor Costs in the Eurozone Pre to the US Credit Crunch 9 Illustration 4: Current Account Balances in Percentage GDP 10 Illustration 5: Core Bank Exposure to the Weaker Eurozone Member States 12 Illustration 5: Holders of Greek Government Bonds and Dept......

Words: 6430 - Pages: 26

Policy Paper

...May 3, 2013 Mark Emmert, NCAA President P.O. Box 6222 Indianapolis, IN 46206 RE: Policy on Social Media use by Student Athletes Dear Mr. Emmert, The object of this letter is to provide you with a much needed policy on the education of proper use of social media by student athletes. It is very important that student athletes understand the effects that improper social media use can have on, not only themselves, but the college they represent, that way they can understand the importance behind this suggested policy. I’m sure you are aware of the increasing usage of social media by society, including student athletes. I hope you will take my policy into consideration helping to educate all student athletes on smart usage of social media. I would like to start off with defining social media as: “Web-based services that allow individuals to (1) construct a public or semi-public profile within a bounded system, (2) articulate a list of other users with whom they share a connection, and (3) view and traverse their list of connections and those made by others within the system.” (Boyd and Ellison) Over the past decade social media has created a boom of excitement throughout the cyber world. With the creation of Facebook, Twitter, and many more social networks, society has become increasingly dependent on social media. Social media is used in a variety of ways. For some it is used as a means of conducting business, rather it be used for advertisements and......

Words: 2019 - Pages: 9

Audit Papers

...rose about the stability and policies that regulated the market. Among the many attributes of the market, major factors that contributed to the downfall relates to macroeconomic trends, market failures and regulatory failures. While several years have passed since the occurrence of the crisis, the United States of America is still recovering from events that saw the collapse of Bear Stearns, a mortgage under-writer in US 2007, Lehman Brothers (2008) and the near collapse of AIG Insurance. It is believed that the GFC of 2007 was the worst financial crisis of recent times. The US market plunged right into the recessionary periods and large multi-national companies struggled to keep up with the market conditions. Also known as, the burst of the financial bubble, governments realized the lack of regulations to control the market. These regulations related to accounting policies, auditing policies and more stringent rules as responses to major corporate collapses and upheavals in the financial sector. The introduction of Sarbanes-Oxley Act (SOX) of 2002 and Corporate Law Economic Reform Program (CLERP) 9 resulted from the shortfalls of the existing regulations prior to 2001. The objective of this paper is to define auditors and GFC. In addition, this paper will look at the how the auditor liability increased because of the GFC. There will also be consideration of any additional issues that may exist in the Pacific as to auditors’ liability. The paper concludes and gives......

Words: 1738 - Pages: 7

Policy Paper: European Standarization Policy

...POLICY PAPER: EUROPEAN STANDARIZATION POLICY Kristiana Elvis Boyadzhieva 20118703 Kristiana.boyadzhieva@gmail.com MBA 546: European Union Matthias C. Suthe Policy Paper 1, February 2014 Each student will select one aspect of EU policy and discuss how it affects different industries, companies, and countries. The paper will involve both providing a general summary of the policy area as well as advising on specific policy changes that might be undertaken and/or are currently under discussion in that area. The paper should present and reflect on the positions of the EU, Member States, Corporate interests, and Citizen Interests. There is probably no area in Europe, which is not be heavily affected by the EU standardization policy. Whether on the European, national, corporate or citizen level – the omnipresence and importance of the EU standardization policy is undisputed and is comparable maybe just with the influence of the EURO. Therefore it is not suprising that EU nations, as well as industries and companies are trying to take an influence on the standardization process, to assure and strengthen their competitiveness and future. European standardization is certainly not only of European significance, but also plays an extremely important role in the global competitive position of the EU and Europe. In the next paragraphs we will provide an overview about the main principles of the European Standadization policy, its goals and benefits, the institutions......

Words: 1572 - Pages: 7

Audit Policy

...[pic] Server Audit Policy Created by or for the SANS Institute. Feel free to modify or use for your organization. If you have a policy to contribute, please send e-mail to stephen@sans.edu 1.0 Purpose The purpose of this policy is to ensure all servers deployed at are configured according to the security policies. Servers deployed at shall be audited at least annually and as prescribed by applicable regulatory compliance. Audits may be conducted to: • Ensure integrity, confidentiality and availability of information and resources • Ensure conformance to security policies 2.0 Scope This policy covers all servers owned or operated by . This policy also covers any server present on premises, but which may not be owned or operated by . 3.0 Policy hereby provides its consent to allow to access its servers to the extent necessary to allow to perform scheduled and ad hoc audits of all servers at . 3.1 Specific Concerns Servers in use for support critical business functions and store company sensitive information. Improper configuration of servers could lead to the loss of confidentiality, availability or integrity of these systems. 3.2 Guidelines Approved and standard configuration templates shall be used when deploying server systems to include: • All system logs shall be sent to a central log review system • All Sudo / Administrator actions must be logged • Use a central patch deployment system • Host security...

Words: 416 - Pages: 2

Policy Paper

...EXAMINING THEORY PAPER INDIVIDUAL ASSIGNMENT Neil Holmes CJA/314 Criminology 06/05/14 Chris DeRicco In this paper, I hope to explain the reasons why people commit crimes and the many theories in the field of criminology. Social process theory is one such assumption and argues that criminal behavior is learned through interactions with others. There are four types of social process theories including: social learning theory, social control theory, social labeling theory, and dramaturgical perspective. This paper will analyze two of the theories and will discuss social process theory and the history of its development, also the theory’s importance to criminology, examples of the theory and any negatives or positives associated with the theory. Social learning theory is the process that occurs through observing the consequences of others and by determining if such behavior is worth replicating (Wallace, n.d.). To put in a nut shell, basically this theory advises that humans learn by watching other commit crimes. This theory was developed in the 1930s by theorists Edwin Sutherland, Robert Burgess, Ronald L.......

Words: 1139 - Pages: 5

Audit Working Papers

...Policy Research Institute, Ministry of Finance, Japan, Public Policy Review, Vol.8, No.1, June 2012 45 Public Sector Accounting - An Interdisciplinary Field Involving Accounting, Economics, and Jurisprudence 1 Ryosuke Tao Research Fellow, Institute of Administrative Management Abstract Public sector accounting has recently been improved. Currently, there are requirements to disclose stock information in addition to the flow information presented in budget statements or accounts statements. Public sectors have prepared and disclosed their financial statements (including balance sheets and income statements) based on business accounting approaches. Moreover, as a matter of policy, the government tends to prepare and disclose cost information along with the financial statements for the individual ministries and governmental agencies. The objectives of clarifying the fiscal conditions in a state through the preparation and disclosure of financial statements are to fulfill the state’s accountability to its citizenry and market participants and to optimize and enhance the efficiency of its fiscal activities. Most importantly, the improved information should contribute to democratic decisions on public finance. A perspective different from the business accounting is that public sector accounting places more emphasis on inter-generational fairness. With respect to the inter-generational benefits and burdens, however, various factors must be considered, and the differences between...

Words: 10883 - Pages: 44

Audit Paper

...Case 2-1 1. (a) What are management’s responsibilities pertaining to the independent audit? In accordance with AU 110, management’s responsibilities pertaining to an independent audit include the financial statements and their presentation. This entails not only the accounting policies used but also conforming to GAAP. Management sets the guidelines for the accounting process from how the transactions are recorded and processed to the internal controls implemented to protect the company. It is also management’s responsibility to have direct knowledge and control of the transactions. (AU 110.03) (b) What are the auditor’s responsibilities pertaining to the independent audit? The responsibility of the auditor in an independent audit is to plan and perform an audit in order to be able and offer an opinion about the company’s financial statements and whether they were presented fairly in accordance with GAAP. Another responsibility of the auditor is to provide reasonable assurance to stockholders and creditors pertaining to the credibility of the client’s financial statements and that they are free of material misstatements. The auditor must have sufficient evidence to back up his findings. (AU 110.02) 2. Assume you have a meeting tomorrow with Stephen F. Lamar. List the top three issues, in order of importance, that you will discuss with him, and briefly describe why you believe each issue is important. If I were meeting with Stephen F. Lamar tomorrow I......

Words: 2736 - Pages: 11

Internal Audit Paper

...Internal Audit – IT Audit Intern We are a specialty retailer offering the very best of what’s next in fashion for men, women and children since 1901. JOIN US WHERE IT ALL BEGAN. Whether you design clothes or business strategies, crunch numbers, lead projects or write code, we have a place for you at our Seattle headquarters. And we think Seattle is a pretty great place to live. More than just rainy days and coffee, Seattle has it all — mountains and beaches, arts and parks, music and film. It's made up of quirky neighborhoods, award-winning restaurants, and thriving industry. Come see for yourself! A day in the life… The ideal internal audit principal is motivated, results-oriented and committed to providing outstanding customer service every day. Responsibilities * Assist the lead auditor with documenting and testing various IT General, Security, Operational and Change Management Controls for Sarbanes-Oxley compliance. * Identify, develop, and document detailed audit observations and recommendations for improvement using independent judgment concerning the control being reviewed * Communicate with control owners across the IT groups to accomplish testing You own this if you have… * Current graduate student or Bachelor of an accredited degree program with concentration in Accounting and/or Management Information Systems/ Information Security * Working knowledge or course work covering the proper application of internal auditing,......

Words: 375 - Pages: 2

Policy Paper

...Policy Paper Public policy is the principled guide to action taken by the administrative executive branches of the state with regard to a class of issues in a manner consistent with law and institutional customs. The foundation of public policy is composed of national constitutional laws and regulations. Further substrates include both judicial interpretations and regulations which are generally authorized by legislation. Strong public policy should solve problems efficiently and effectively, serve justice, support governmental institutions and policies, and encourage active citizenship. Some of the major issues that are trying to be addressed in today’s public policy concerns are the Tax policies empowering community solutions through the non-profit organizations. Budget and spending is a concern and addressing the communities’ needs. The Economy by strengthening communities through hob creations and economic development, Public-Private collaborations for the public good, Promoting civic engagement, and Public accountability and ensuring public trust. Knowing the importance of education in today’s society I would have to say that the K-12 Federal Policy Issue of No child left behind act is very important. Who are the stakeholders and affected constituencies? A stakeholder is any person who will be directly affected by the outcome of a decision-making process. It is a term that is commonly used when talking about public policy decision-making or dispute resolution,...

Words: 1705 - Pages: 7

Audit Paper

...the work they, the professional, has done. 2. Explain what is meant by independence in mind and independence in appearance. Independence of mind is the auditor’s state of mind that permits the audit to be performed with an unbiased attitude while Independence in appearance is the publics’ interpretations of this independence. To put in in simpler terms, being independent of mind means that the auditor has no biases toward the audit client and independence in appearance means that the general public and users of the audited financial statements believes that the auditor does not have any biases towards the audit client. 3. Explain why it is necessary for auditors to maintain the appearance of their independence. The reason the auditors have to appear independence is so that the public has confidence in the report produced. Since as an ethical professional, the public expects that the auditor would work in the best interest of the users of the financial statement, the auditor not only need to be actually unbiased but also appear unbiased so that the users of the financial statement trust the information presented to them as being reasonably without material misstatements. If the public does not think the auditor is independent, the auditor loses public confidence and the audit performed loses value. 4. Discuss and explain what ET Section 54, Article 3 – Integrity, of the AICPA Code of Professional Conduct requires of professional accountants Section 54, Article 3......

Words: 614 - Pages: 3

Social Policies Paper

...Social Policy Decisions Paper Tawanda L. Wright BSHS/355 May 30, 2016 Pam Harris Social Policy Decisions Paper On May 3, 1980, a 46-year-old drunk driver fatally killed 13-year-old Cari Lightner in a hit-and-run drunk driving accident. The fatal accident that leads to the death of Cari Lightner was a result of drunk driving that causes her mother, Candace (Candy) Lightner’s organization of Mothers Against Drunk Driving (MADD). Mothers Against Drunk Driving (MADD) was established on September 5, 1980, four months after 13-year-old Cari’s tragic death. The platform was created by Mothers Against Drunk Driving as a way of bringing public awareness of the results of driving while intoxicated and under the influence of drugs. Mothers Against Drunk Driving (MADD) also provided support to families and victims of drunk driving. Through the organization, a small group of women who went around the nation providing information and facts about driving under the influence of drugs and alcohol. What initially started out as a small group of women quickly caught the attention of the United States Congress. MADD is still active today and has hundreds of chapters across the United States. Social Policies of MADD The overall predicament that led to the establishment of Mothers Against Drunk Driving (MADD) was due to the individuals who were driving while under the influence of alcohol. Individuals were driving while under the influence of alcohol since the end of prohibition.......

Words: 823 - Pages: 4

Policy Paper

...Policy Paper: Family Benefits I. Introduction The policies that will be explored are policies that are aimed at family issues that affect men and women. These policies have a explicit goal of affecting the constraints on family decisions. This policy will include who will work and how much, whether to form or dissolve a family, and how many children to have. The policy will cover family leave, both paid and unpaid, no-fault divorce form, subsidizing or employer-provided childcare or health care, regulation of the minimum wage law, and welfare programs. (Jacobson) The question to be explored with this policy is should both men and women have a more family wok environment that would include paid and unpaid family leave and either a child care program at work or be subsidized for daycare? Another question is what should the regulations to increase the minimum wage law? The last question is how to regulate welfare programs and government run programs to subsidize income? This will take you through today’s regulations for these policies and past regulations for the policies and regulations stated. II. Analysis of the Problem Many low-income workers lack connections to receive information about work support, the employer has the potential to become the means by which eligible individuals gain information about benefits available to them. Many low-income workers will stay at work because they have to pay the bills. There is assistance for daycare that they may not......

Words: 1044 - Pages: 5

Policy Paper

...Policy Paper The representative I chose is Barack Obama and his view on federal spending as a means of promoting economic growth. As the 44th president of the United States, he has a major influence on the National issues and polices. I personally feel that spending money as a way to gain more is potentially the best way for economic growth as long as you know what you are doing, and with the people and resources Obama has I feel he can make it work. Obama also agrees with my reasoning as he also agrees that federal spending is important for promoting economic growth. In the United States we are currently in the process of trying to recover from a recession, so the government is careful in its spending, but the question remains how the government should spend their money and on what. During this time most people are naturally against government spending due to the fact they feel the government should save its money, but wheat most people don’t realize is that a lot of times spending money in the right places can actually simulate money growth. As president Obama understands that in order to get us out of this economic slump he must use some of our money to help the economy grow. As a voter, I voted for president Obama because of his view on the issues and his ideas for change. For the most part Obama’s ideas and records match with my beliefs and I can definitely agree with them. The specific bill is worded exactly how is sounds where the government spends money on......

Words: 448 - Pages: 2

Audit Paper

...Salman Budhwani: Keller CPA Independent Audit Report Smackey Dog Foods, Inc We have accepted the client and have started performing the audit on Smacky Dog Food. We have done our research over the company and the industry as a whole. We are aware that Smacky Dog Food is a small wholesale distributer of perishable dog food. Currently the company has a loan of $150,000 and is asking for another $150,000 to expand their business. The bank assumes the $150,000 risk and our client has the obligation to pay down their debt. Keller CPA will perform the necessary analytical procedures to better understand the financial strength of the company. Our preliminary judgment about Smacky Dog Food’s materiality is negative in respect to their Reliability of financial reporting: Management is responsible for preparing statements for inventors, creditors and other users. Income statements, balance sheet, and cash flow statements are not provided by management. We have conducted the audit in accordance with Generally Accepted Accounting Standards. By following these standards we will perform this audit so it will be free of material misstatements. An audit includes understanding the clients business and industry, assessing client business risk, performing analytical procedures, set materiality and assess acceptable audit risk and inherent risk, understanding internal control and assess internal control risk, and finally gather information to assess fraud risk. We will review all...

Words: 1552 - Pages: 7