Introduction
Auditors audit, rather than recreate, the records of clients. As such, trust is an inherent factor of the audit process (Schaub, 1996). An auditor also needs the information provided by management to be truthful to carry out the audit. Therefore, an auditor must trust the members of management to provide truthful information (Rennie, 2010). Auditors must also provide an overall evaluation of the client’s trustworthiness when planning the audit and evaluating the client’s control environment (Schaub, 1996). However, “The Independence Standards Board identifies auditors’ familiarity with the client as one of five threats to auditor independence. To foster auditor independence and objectivity, the Sarbanes-Oxley Act of 2002 bans auditors
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“Social Identity Theory holds that individuals’ social identity results from a self-categorization process, through which individuals cognitively group themselves with others” (Bamber and Iyer, 2007). As such, many believe that professionals, such as auditors, can have multiple identities. The Social Identity Theory specifically predicts that professionals who directly interact with their clients begin to identity with their clients. Bamber and Iyer (2007) found that auditors do identify with their clients, and that this result may impair auditor objectivity. The authors also found that auditors who identify strongly with their client are more likely to concede to client-preferred treatment of a materiality and not require a liability to be recorded in the financial statements. However, in addition to the above findings, the authors also found that auditors’ professional identification is on average stronger than their client identification. Professional identification in this case is the extent to which auditors identify with the auditing profession. Auditors who identify with their profession are more likely to internalize the profession’s norms and values (Bamber and Iyer, 2007). This finding can help to mitigate the negative effects of client identification on auditors’ objectivity. Auditors who identify more with their profession were found to be less likely to concede to the client’s position. Bamber and Iyer (2007) state that “These results support the recent efforts by regulators and accounting firms to emphasize the tone at the top and to push professional values down the firm
Auditors do not provide audit opinions for different levels of assurance. Therefore, auditors consider providing more or less assurance when modifying evidence for engagement risk to be unnecessary. However, auditors should be professionally responsible to accumulate additional evidence, assign more experienced personnel, and review the audit more thoroughly, particularly when a client poses a higher than normal degree of engagement risk. The auditor should also modify evidence for engagement risk when high legal exposure and other potential actions affecting the auditor
Investing and lending public: These individuals and entities rely on independent auditors to carry out their “public watchdog” function rigorously, including reporting honestly and candidly on their clients’ financial statements. The integrity and efficiency of our nation’s capital markets are undermined when auditors do not fulfill their professional responsibilities. This will cause these individuals lose faith on the auditing work and might not cooperate with auditors anymore.
Throughout the past several years major corporate scandals have rocked the economy and hurt investor confidence. The largest bankruptcies in history have resulted from greedy executives that “cook the books” to gain the numbers they want. These scandals typically involve complex methods for misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of assets or underreporting of liabilities, sometimes with the cooperation of officials in other corporations (Medura 1-3). In response to the increasing number of scandals the US government amended the Sarbanes Oxley act of 2002 to mitigate these problems. Sarbanes Oxley has extensive regulations that hold the CEO and top executives responsible for the numbers they report but problems still occur. To ensure proper accounting standards have been used Sarbanes Oxley also requires that public companies be audited by accounting firms (Livingstone). The problem is that the accounting firms are also public companies that also have to look after their bottom line while still remaining objective with the corporations they audit. When an accounting firm is hired the company that hired them has the power in the relationship. When the company has the power they can bully the firm into doing what they tell them to do. The accounting firm then loses its objectivity and independence making their job ineffective and not accomplishing their goal of honest accounting (Gerard). Their have been 379 convictions of fraud to date, and 3 to 6 new cases opening per month. The problem has clearly not been solved (Ulinski).
People go through many obstacles when they face their social identity. Some can overcome their differences, but others may not have they change to even face them due to the treatment that they get from society. Social identity is the one of many controversial and complex problems that many individuals deal with. Because, sometimes it used to be misunderstood making reference to racism and/or others complex matters. “On Being a Cripple” and “How It Feels to Be Colored” are two essays in which both characters suffer from some kind of discrimination. Indeed, in “How It Feels to Be Colored Me” by Zora Neale Hurston and “On Being a Cripple” by Nancy Mairs, each author shows different attitude, endures challenges, and change toward social identity.
... M. & Terry, D. (2000). Social identity and self-categorization processes in organizational contexts. Academy of Management Review, 25, 121-140.
This essay will be looking to evaluate the strengths and weaknesses of the social identity theory with studies to support.
For many years, the study of prejudice has been the central focus of social psychology (Augoustinos et al 2014). There is a strong understanding that social relations are more often than not marked by conflict as a result of social groups maintaining conflicting interests and a desire to change the out groups beliefs, inevitably leading to conflict between the two (Batalha 2008). Whilst it is important to study prejudice as it is a persistent social problem, often which every individual will associate with (Augoustinos et al 2014) it is ultimately impossible to expect social psychologists to explain every prejudicial encounter, such as the event of The Holocaust (Augoustinos et al 2014). Nevertheless, social psychology has attempted to examine
Social identity is what everyone is focused on, but most definitely not their favorite matter. In the words of Peter J. Burke, “Social identity theorists have argued that because people define themselves in terms of their social group membership and enact roles as part of their acceptance of the normative expectations of ingroup members, the concept of role is subsumed under the concept of group” (4). All this society is focused on is finding where everyone fits in it. And if the people do not fit perfectly in whichever faction they may choose, they are exiled into being factionless. This is beginning to sound more and more like a “perfect” society, isn’t it? “People who get these kinds of results are…’ She looks over her shoulder like she expects someone to appear behind her, ‘are called… Divergent.’ She says the last word so quietly I almost don’t hear it, and her tense, worried look returns” (Roth 22). The fact that when Tris gets these results, Tori Wu—the person who administers the aptitude test for her—is completely and utterly terrified for her being divergent, shows how dark their society is. It is modeled in such a “cookie-cutter” way, that if someone does not exactly fit in the way that the society wants them to, they are automatically an outsider. Tris constantly fights social identity all throughout the book; it is almost like peer pressure, but from society alone. With this social identity, one is usually classified in terms of what group they belong to. According to critic Kay Deaux, “to the extent that one defines oneself in terms of a particular group, it affects the behaviors one enacts for oneself and the way one interacts with others who may be members of a different group.” This quote explains how differently i...
Social identity theory proposed by Henri Tajfel and later developed by Tajfel and Turner in 1971. The theory is to understand intergroup relations and group processes. Social identity theory suggests that the self-concept is based on knowledge of our membership to one or more social groups; people enhance their self-esteem, which can also be boosted by personal achievement and affiliation with successful groups, in attempt to improve their self-image, which is based on personal identity or various social identities.
Auditors’ independence has become a serious issue and an aggressive debate commenced after the big corporate collapses (Enron, WorldCom) in the United States in 2002 (Ahmad et
This chapter is about how our identity influences the communication we will use in an interaction
...pendence, whether pro forma or substantially, the quality of professional assurance service of professional accountants will be doubted by public and that will probably lead to serious results. The factors affecting independence of external auditors are multiple. Market competition among external auditors and the imperfection of laws regulated the external auditing industry are tow of most important factors. In order to maintain and guarantee the independence of external auditors and try to avoid the scandals like Arthur Andersen, some research on how to improve and maintain the independence of external auditors are necessary. It is possible for researchers to put emphasis on how to control the market competition among auditing organizations and enhance the ability of accounting regulators to supervise and manage the professional accounting industry in the future.
“Evaluate Social Identity Theory making reference to specific studies” Social Identity Theory (SIT) (1971), introduced by Henri Tajfel, states that individuals attempt to enhance their self-image by improving their self-esteem, either based on their personal identity or diverse social identities. The theory is based on four concepts including social categorization, social identity, social comparison and positive distinctiveness and has been used to explicate social phenomena such as stereotyping, conformity, in-group favoritism and ethnocentrism. This essay will highlight the strengths and the limitations of the social identity theory in reference to Robber’s Cave Experiment (Sherif 1961) and Tajfel’s Minimal Group Paradigm (1970) and additionally,
As per ISA (NZ) 200-A17, this ethical requirement includes the auditors integrity, objectivity, professional competence and due care, confidentiality, & professional behaviour. Integrity is an ethical attitude which includes the auditor’s honesty, accuracy, and fair practice. Objectivity is a mental attitude while carrying out the audit wherein the auditor is fair and just with all his/her work. Professional competence is the knowledge and skill of the auditor, gained through education, training and experience, while due care is a degree of care of an auditor on certain situations wherein an he/she must act diligently. Confidentiality is the commitment of the auditor not to disclose any information regarding his/her client, unless required by law. Professional behaviour means the auditor must act in accordance to the law and set of standard as a manifestation of respect to the
The evolution of auditing is a complicated history that has always been changing through historical events. Auditing always changed to meet the needs of the business environment of that day. Auditing has been around since the beginning of human civilization, focusing mainly, at first, on finding efraud. As the United States grew, the business world grew, and auditing began to play more important roles. In the late 1800’s and early 1900’s, people began to invest money into large corporations. The Stock Market crash of 1929 and various scandals made auditors realize that their roles in society were very important. Scandals and stock market crashes made auditors aware of deficiencies in auditing, and the auditing community was always quick to fix those deficiencies. The auditors’ job became more difficult as the accounting principles changed, and became easier with the use of internal controls. These controls introduced the need for testing; not an in-depth detailed audit. Auditing jobs would have to change to meet the changing business world. The invention of computers impacted the auditors’ world by making their job at times easier and at times making their job more difficult. Finally, the auditors’ job of certifying and testing companies’ financial statements is the backbone of the business world.