Role of Auditors

In: Business and Management

Submitted By vitomccorleone
Words 1588
Pages 7
Question: Why is it important for external auditors to be independent? Relate your answer to the primary role of external auditors. Give examples of specific ways the lack of auditor independence may impact adversely on an audit.

Auditing can be defined as the systematic process of obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.
An external auditor performs independent, third-party reviews all the financial records of a company or corporation. He evaluates all accounting, payroll and purchasing records, as well as any documents related to investments, stocks or loans. His job is to provide an accurate, unbiased analysis of the company’s financial condition. Its objective is to determine, among other things, whether the accounting records are accurate and complete, prepared in accordance with the provisions of GAAP, and the statements prepared from the accounts present fairly the organization's financial position, and the results of its financial operations.
Internal auditing is also done and an internal auditor is appointed by the firm. His functions are more towards the firm as he is appointed by it. He looks into the strategies and goals of the firm and assesses them to near perfection. He provides helpful advices and reports on the firm’s growth. But the role of an external auditor is a bit more different from the internal auditors. An external auditor mostly comes into play during the scams and getting government verification on the related firm’s accounting details. In such cases, first an external auditor approved by the government should be appointed by the firm. The government appoints an external auditor who is not connected to the company, as it may be construed as…...

Similar Documents

Auditor Independent

...mind based on integrity and an objective approach to work. He maintained that an auditor must at all times, perform his research objectively and impartially and free from influence by any consideration which might appear to be in conflict with this requirement. Also Appah (2008) note that independence in auditing means having a position to take an unbiased view point in the performance of audit test, analysis of results and attestation in the audit report Background Advisory services revenue grew rapidly at public accounting firms during the late 1990s. At that time, the major source for the growing income in accounting firms was non-audit services, such as tax advisory, information systems design and implementation, management functions and human resources, and the 70 percent of revenue of the Big Five came from consulting and other non-audit services. However, after Enron went bankrupt and the Sarbanes-Oxley Act of 2002 (SOX) was issued, most of the large accounting firms divested their advisory service business. Three factors drove these divestitures: 1) internal management tensions because of the faster revenue growth and perceived higher margins of advisory services as compared to assurance service; 2) the opportunity to unlock higher values and raise capital through sales to public offering (IPO); 3) the pressure applied, and regulations adopted, by policymakers aimed at ensuring auditor independence. Current concerns about the non-audit service’s effects......

Words: 844 - Pages: 4

The Changing Role of External Auditor

...accounting records to be audited and in true and fair view. Independence of the auditors also being underline in the Act, where any relationship between the independent auditor and the companies must be disclose, to prevent any conflict in interest when auditing the accounting records. The external auditors were given the power to obtain information and inspect the accounting records of the companies because of the nature of their duties. As stated in Companies Act 1965 section 174 (2)(a), the roles of an auditor is to report the consolidated accounts by give a true and fair view as required by section 169 and in accordance with the applicable approved accounting standards. In 1971, during the implementation of New Economic Policy (NEP), where after the eruption of violence between Malays and Chinese in 1969, Malaysia economy change its direction from to target foreign interest of free enterprises towards in the control of the government. By the strong presence of the government to improve and balance the economics including the incomes distribution and assets ownerships, Malaysian now has a shared goal together in socio-economic; and thus increase the demand for the independent auditors and present more existence. During 1980s, Malaysia was in economics recession where NEP was slowly being discarded by the local communities and come to an end. There are no any significant changes in the roles of the auditors in late 1980s when started the operation of KLSE and amendment......

Words: 1490 - Pages: 6

The Auditor

...The Auditor Paper 6-8: According to the book, it is incredibly important to successfully complete the CPA exam in the first year. Jack Butler informs us that new staff members can greatly distinguish themselves by passing the CPA exam the first attempt because so few people manage to do so. Other benefits of this would include spending less time studying and more time working, financial benefits of not having to pay for additional attempts, and it is mandatory in order to move up in the company. 9-7: If someone is to leave public accounting and go into industry there are many things to take under consideration. One would be to answer the question of “do you really want to go into industry?” This seems like a simple enough question to consider, but it goes a little deeper. With any major decision it is imperative to consider the things you would like and dislike about the job you would be moving to. One should also consider if the company is a good fit. Finally, someone interested in going into industry they should consider how they are progressing in their current firm first. 14-6: The answer to the question of “is it possible to have both a successful career and a healthy personal and family life,” is really an arbitrary one at best. Of course it is possible, but it all depends on the person and the position. Obviously there are going to be tradeoffs. As indicated in the book, there is the possibility of stress related health issues to consider. There is the......

Words: 574 - Pages: 3

Role of Auditors

... NE 68744 Dear Mr. Schuller, Subject: Role of Auditors Our firm offers auditing and other assurance services. Our auditing services are comprehensive, reliable, and objective. Our auditors comply with all required literature and pronouncements in our audits. It is for this reason our clients, external users, and the general public place high value in our work and takes our firm seriously. We don't compromise objectivity or judgment in any part of our auditing work. In addition, we offer valuable assurance services that are custom designed to meet the needs of your company. We offer these services on as few as one document in assuring to the reliability of various business aspects. A few of our most common assurance services include valuations, various aspects of operations, and assurance services related to processing. As the senior audit partner, my role is to oversee all aspects of the audit. I will ensure that all audit team members are performing their duties as expected. I will also be the person to remain in constant contact with the CEO and the audit committee. You will be promptly notified of any problems or issues that arise when we are contracted for any type of auditing or assurance services. I have X years of auditing field experience and I am a licensed CPA. Each person on our auditing team also has extensive education and professional experience, and together we form a comprehensive, professional team of auditors and accountants that are able to......

Words: 377 - Pages: 2

Corporate Fraud and the Role of Auditors

...CORPORATE FRAUD & THE ROLES OF AUDITOR (BANGLADESH PERSPECTIVE) Submitted To: Tahmina Ahmed Lecturer Department Of Accounting And Information Systems University Of Dhaka. Submitted By: Group No. 02 ID 18003 18051 18053 18073 18089 18200 NAME Safiqur Rahman Mahadin Anik Mahmudul Islam Arnab Kumar Chakrabartty Abdullah Al Noman Namrata Chakma Date of Submission: November 11, 2014. 1|Page This Report Includes The Following Contents Chapter No. Contents Page No. 01.Introduction 1.1 1.2 1.3 1.4 Introduction. Scope of the report. Objective of the report. Limitations of the report. What is corporate fraud? Kinds of corporate frauds. Reasons for corporate fraud. Auditor’s role. Bangladesh perspective. Findings of the study. 03 03 03 04 04 05 05 06 09 10 02.Literature Review 2.1 2.2 2.3 2.4 2.5 03.Findings Of The Study 3.1 04.Conclusion & Recommendations 4.1 4.2 Conclusion. Recommendations. 12 13 05. References. 5.1 References. 14 2|Page CHAPTER 1 INTRODUCTION 1.1 WHAT IS CORPORATE FRAUD AND WHAT WE ARE GOING TO DO THROUGHOUT THE WHOLE REPORT? The term ‘Fraud’ essentially includes the use of deception to make some personal gains for oneself dishonestly obviously and create some losses for another within the organization or outside the organization. Although definitions of corporate fraud vary in different situations, most of them are based on these general themes. The term ‘Corporate Fraud’ usually includes activities such as corruption, misuse of......

Words: 3700 - Pages: 15

Auditor’s core competencies and has allowed it to achieve much success. This can largely be attributed to its formulation of a rich beer culture and environment. Boston Beer is highly selective about who it hires, and it will not hire a person just because a job is unfilled. Koch believes in waiting for the best fit and avoiding “desperation hires”. On this subject Jim was quoted, “It took us 18 months to hire that person, her name is Andrea—that was fifteen years ago. Andrea’s still with us today. Was it worth waiting a year and half to hire somebody who’s going to be with you for 15 years and just gets better and better and you promoted her four times? Absolutely.” (Baer) Furthermore, the company asks job candidates to audition for the role desired which entails a day long “audition” instead of relying on traditional face-to-face interviews alone. (Baer) Once hired and extensively trained, Boston Beer’s employees are immersed in a fun, beer-wise culture. The most significant event is the annual homebrew competition that every employee takes part in to help spark new ideas and guide the research and development in Sam Adams’ never ending quest for new beer flavors. Other organizational capabilities of Boston Beer Company are its innovativeness in creating many different flavors and styles of alcoholic beverages and its ability to transfer the fine natural ingredients into the full bodied flavors of beer that differentiate themselves greatly from the popular light beers. ...

Words: 3430 - Pages: 14

Auditors' Virtues

...The Identification and Categorization of Auditors' Virtues Author(s): Theresa Libby and Linda Thorne Source: Business Ethics Quarterly, Vol. 14, No. 3, Accounting Ethics (Jul., 2004), pp. 479-498 Published by: Philosophy Documentation Center Stable URL: . Accessed: 08/02/2015 09:11 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact . Philosophy Documentation Center is collaborating with JSTOR to digitize, preserve and extend access to Business Ethics Quarterly. This content downloaded from on Sun, 8 Feb 2015 09:11:03 AM All use subject to JSTOR Terms and Conditions THEIDENTIFICATION CATEGORIZATION AND OF AUDITORS' VIRTUES Theresa LibbyandLinda Thorne paper, we develop a typology of auditors' virtues throughin-depth interviewswith nine exemplarsof the audit community.We comparethis typology with prescribed auditors'virtues as represented in the applicable Code of ProfessionalConduct.Our comparisonshows that the Cocleplaces a primary......

Words: 7211 - Pages: 29

Internal Auditor

...Recommendation Brief for an Internal Accountant Internal auditing helps companies to look at ways of improving and achieving short-term and long-term objectives. Internal auditors are hired to perform internal audits that look at a company’s operations, investigating fraud, financial reporting, safeguarding assets, and compliance of the laws and regulations set for companies. The internal auditors are employed to improve a company’s internal controls. Effective working internal controls detect and prevent fraud that is tested by internal auditors. Benefits of Internal Auditor Understanding the benefits of an internal auditor will help in the decision of hiring an internal accountant. Internal auditors verify the effectiveness of their organization's internal controls and check for mismanagement, waste, or fraud. They examine and evaluate their firms' financial and information systems, management procedures, and internal controls to ensure that records are accurate and controls are adequate. They also review company operations, evaluating their efficiency, effectiveness, and compliance with corporate policies and government regulations (Bureau of Labor Statistics). As an internal auditor he or she will be able to look for any mistakes and address them in the reports. Finding a professional to fill the role of an internal auditor benefits the structure of a growing business, because it prevents the creation of faulty processes and limits the liability the company may be......

Words: 676 - Pages: 3

The Auditor Summary

...The Auditor Book Summary The Auditor, an instructional novella written by James K. Loebbecke, tells a story about a man named Jack Butler, who is from San Francisco Bay area, goes to college, majors in accounting, and goes to work for a large accounting firm referred to as “The Firm.” The auditor is based on real world experiences of the author that lets students follow Jack Butler’s journey up the company’s ladders at The Firm, which gives students a better understand of the auditing profession. The story begins with Jack Bulter getting a promotion to become a partner in the firm in which he has been working for over 10 years. We are later introduced to his colleagues Dan Pamell and Barbara Gillespie who were in the same situation as Jack to whether they were going to be chosen as a future partner. In the end Barbara Gillespie gets the promotional, worrying Jack that his relationship with Dan Pamell be affected with not obtaining the position. At the end of the book Don, Jack’s friend, was offered to get a partnership position in the Oakland branch but he declined it. As the story progresses, we follow Jack through the struggles and achievements that lead him into becoming a partner as well as maintaining a life outside the office. As the story progresses, Jack Bulter explained how he was going to purse a law degree to become a lawyer like his father who we learn is a partner in Messner, Smith and Bolther in San Francisco. After taking some accounting classes and......

Words: 824 - Pages: 4

Auditor Rotation

... Audit Quality The primary role of accounting is to reduce information asymmetry by providing investors with relevant and reliable information in order to create an efficient allocation of resources. However, there is often a tradeoff between relevance and reliability that needs to be considered when imposing regulations (Scott, 2012). When information asymmetry is present, investor faith decreases, compromising the efficiency of the market. In order to prevent market failures, it is critical to maintain investor confidence; this can be done by achieving high audit quality. Definition The PCAOB defines audit quality as providing “independent and reliable audits” regarding management’s financial statements, internal controls and potential threat for going concerns (PCAOB, 2013). Four key aspects of audit quality include independence, objectivity, skepticism, and competence. Maintaining and improving the four elements is critical to increasing audit quality and the usefulness of the information provided. Independence According to the PCAOB Auditing Standards, auditors should maintain independent mental attitudes. Independence is defined by the AICPA Code of Professional Conduct as independence of both, mind and appearance. Independence of mind requires the auditor to act with integrity, free of outside influence whereas independence of appearance requires the avoidance of situations leading to potential conflict of interests. Unless, the auditor is truly independent, the......

Words: 5991 - Pages: 24

The Role of Auditors in Fraud Detection, Prevention and Reporting in Nigeria

...University of Nebraska-Lincoln 11-2-2010 THE ROLE OF AUDITORS IN FRAUD DETECTION, PREVENTION AND REPORTING IN NIGERIA Ayobami Oluwagbemiga Oyinlola Mr Tai Solarin University of education,Ijagun, Ijebu-Ode, Follow this and additional works at: Part of the Library and Information Science Commons Oyinlola, Ayobami Oluwagbemiga Mr, "THE ROLE OF AUDITORS IN FRAUD DETECTION, PREVENTION AND REPORTING IN NIGERIA" (2010). Library Philosophy and Practice (e-journal). Paper 517. THE ROLE OF AUDITORS IN FRAUD DETECTION, PREVENTION AND REPORTING IN NIGERIA OYINLOLA OLUWAGBEMIGA Tai Solarin University of Education, Ijagun , Ijebu-ode Ogun State. Abstract This study investigates the role of auditors in the detection, prevention and reporting of fraud. Data were obtained from 184 respondents in Nigeria. The findings revealed that the respondents are very concerned about the problem of fraud. In addition, the respondents placed very high expectation on auditors’ duties on fraud prevention and detection. This perception is in contrast with the stated primary objective of an audit, as stipulated in ISA 200, which merely required auditors to form an opinion on the financial statements, but not of fraud detection. Keywords: Auditors, fraud, detection, prevention Introduction That an auditor has the responsibility for the......

Words: 3964 - Pages: 16

Health and Auditors

...สุ ขภาพกับผู้สอบบัญชี Health and Auditors สรารั ศมิ์ ทองนิลพันธ์ 1, ณัฐชา ศุภพันธุ์มณี2, ธีรดา สุ ฐิติวนิช2, ญาณิศา บัวพิพฒน์ วงศ์ 2 และวริศรา พงศ์ กลํา2 ั ่ Sararas Thongnilpan, Nattacha Suppapanmanee, Teerada Suthitiwanich, Yanisa Buapipatwong and Warissara Pongklum 0 บทคัดย่ อ ั งานวิจยนี้มีวตถุประสงค์เพื่อศึกษาปัจจัยที่มีความสัมพันธ์กบสุ ขภาพของผูสอบบัญชีโดยสังเกตจากอาการและโรคที่ ั ั ้ พบ ใช้แบบสอบถามในการเก็บรวบรวมข้อมูล โดยส่ งเป็ นจดหมายอิเล็กทรอนิ กส์ และแจกแบบสอบถามถึงกลุ่ม ตัวอย่างโดยตรงจํานวนทั้งสิ้ น 891 ชุด ได้รับกลับมาเป็ นแบบสอบถามที่สมบูรณ์จานวน 109 ชุด การวิเคราะห์ขอมูล ํ ้ ใช้สถิติเชิ งพรรณนา และการวิเคราะห์ขอมูลด้วยสมการถดถอยเชิ งเส้นและสมการถดถอยโลจิ สติ ค ผลการวิจย ้ ั พบว่ า อาการปวดคอ บ่ า ไหล่ และโรคเครี ย ดถู ก พบมากที่ สุ ด ในกลุ่ ม ตัว อย่ า งผู ้ส อบบัญ ชี ปั จ จัย อิ ส ระที่ มี ั ความสัมพันธ์ทางสถิติกบอาการและโรค ได้แก่ ชัวโมงทํางานเฉลี่ยต่อวัน และอายุการทํางาน ผูสอบบัญชี ที่มีชวโมง ้ ั่ ่ ทํางานเฉลี่ยต่อวันมากมีโอกาสที่จะมีอาการและโรคมากขึ้น และผูที่ทางานมานานแล้วมีโอกาสพบโรคมากขึ้น ้ ํ คําสําคัญ: สุขภาพ, อาการ, โรค, ผู้สอบบัญชี Abstract This research aims to study determinants of auditor’s health, observed from symptoms and diseases. Questionnaires were used for data collection and sent to the sample through emails and in person, 891 in total. There were 109 completed questionnaires. Data were analyzed by using descriptive analysis, linear regression and logistic regression analyses. This study found that......

Words: 2273 - Pages: 10


...enhances their ability to move across areas of the business (see Figure 1). This value is recognized by those 1,047 respondents who are currently pursuing a CMA designation (41% of all respondents and 87% of the non-CMAs). When asked the primary reason for pursuing the designation, 78% said “career advancement.” One example given was that it helped the person make a “career shift from Human Resource function to accounting and finance.” CMAs globally also largely agree that their certification creates career opportunities (see Figure 2). A 30-year-old financial analyst with a manufacturing company in India commented, “Earlier I was working as Sr. Financial Analyst with our factory. After completion of my CMA, my profile was considered for role of Site Finance Manager. So I must say CMA supports me lot for my career advancement.” 2015 Global Salary Survey 11 Figure 1: CMA certification strengthens my ability to move across all areas of the business (Percent Agree) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Americas Asia Europe Middle East/Africa All Regions Figure 2: CMA certification creates career opportunities for me (Percent Agree) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Americas Asia Europe Middle East/Africa “ All Regions I want to declare that my most important benefit received from the CMA program was the knowledge itself even before I have passed the......

Words: 7143 - Pages: 29


...After discussing briefly the primary role of a company auditor, consider why ethics is important to auditors. Evaluate how significant the contribution of auditors to the effective corporate governance of large U.S companies. Introduction: “An audit is the independent examination of,and expression of opinion on, the financial statements of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligations.” Auditing Standard Guidelines, U.K. Auditor is a very important evaluator of company he reviews and examines financial reports and his report is an important input for taking important decision , hence he needs to be ethical so that company can take true and fair decision . Auditor play a vital role in effecting corporate governance . Role of auditor : In financial accounting, an audit is categorized by the independent assessment of the justice by which a company's financial statements are prepared and presented to and by its management. This task is mainly performed by the skilled, competent, independent and objective persons, known as accountants or auditors. Auditors are on the whole very knowledgeable with every aspect of auditing and they in turn issue a report known as auditor’s report. There are mainly two types of auditors: External Auditors: These auditors are called from outside the company to access and evaluate financial statements of their clients or to perform necessary evaluation than......

Words: 1521 - Pages: 7

Role of Auditors

...Many people are familiar with the role of the ethics in the auditing profession which basically is integrity and objectivity for the auditors. This essay addresses dimension of the ethics in the profession of auditing main demands for them in the profession is to assess the integrity and the ethical value of their customers or clients. This is indeed very difficult task for the auditors in practice and demands a deep and robust understanding the value of ethics, ethical infrastructure with their products. According to roger D, martin auditors face ethics issues from two perspectives among which one is well known and other being known and appreciated by the people who are familiar with auditors knowing their work and responsibility. The prospective of this is to deal among the ethical foundation of the auditing profession and to show the integrity and get appreciated with the job they do. This indicates ethics prospective as seeking within their profession on how to manage and achieve their targets with no difficulty. The other prospective, which the auditors face, is to understand and get the solution for the current and new clients. This is generally referred as an assessment, which demands a complete attention and understanding of ethics, ethical infrastructure and the solution of that infrastructure. This essay will give a complete picture on why ethics is important to the auditors and how significant is the contribution of auditors is to the effective corporate......

Words: 1470 - Pages: 6