More handpicked essays just for you.
Essays on internal control in auditing
Professional skepticism helps auditors
Internal audit as an effective internal control system
Don’t take our word for it - see why 10 million students trust us with their essay needs.
assessment and the incorrect assertion depends on the conditional information that the auditor is having. Some of the reasons highlighted about the financial misstatements are clients’ effective internal controls.
The auditors with high professional skepticism are likely to bring more persuasive evidence in terms of quality and quality of information that leads to more accurate financial reporting with error free statements. So for conducting effective audits it is necessary for auditors to adopt professional skepticism. A model has been presented in the paper that is used for highlighting dependence of audit evidence on auditors’ knowledge and certain traits including incentives for producing making accurate judgments reflected through professional
…show more content…
The first factor is the personal specific traits and characteristics of auditor that influences the professional skepticism as it is important in determining the personality of an auditor and developing tendency towards skepticism. Second facto involves the knowledge, training and experiences that are attained form education and have significant impact on auditors’ skepticism. Third factor involves the incentives that are for developing effective audits and the incentives involve clients’ fee, potential costs of negative inspections and audit failures and evaluation of time …show more content…
There are possibilities of replacing BEC section with integrated section that involves higher order skills by incorporating components of taxation, auditing, financial accounting and reporting. The staff is still exploring the idea of integrated section and finding if it is possible to replace it with the BEC section as some support for BEC still exists. AICPA’s intentions are to test the professional skepticism on CPA exam.
The purpose of incorporating professional skepticism is providing sate of board with reasonable accounting assurance that confirms the students who passed grades are having necessary technical knowledge and skills and the purpose is ensuring exam measures with right knowledge and skills for protecting public interest. Application skills have been modified and increased emphasis has been on higher order skills and evaluation
Overall, the work performed to test the relevant financial statement assertions and the evidence gathered has led our audit team to conclude that the confirmation issues encountered may signify that a potential for material misstatement exists. For example, the existence of a line of credit in one of the Financial institutions indicates that we need to perform further investigation to assess the reliability of the findings.
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
When it comes to the audit objectives, the public and the auditing profession maintain varying expectations. The public expects the prevention of fraud to be the auditor’s responsibility. However, the auditors believe that they are responsible for fraud detection, but not obliged to find all of it. In addition, the public views the fraud by the characteristics displayed by management and employees. For example, WoolEx Mills’ management wanted to exude a prevailing financial position and to uphold reputations. By committing financial statement fraud, it made the company look successful even though Sales and cash flows were decreasing. The public would view these particular characteristics as pressures to why the company committed fraud. Greed, recognition, and influences also impacted the public’s view of Wool Ex Mills’ fraud scheme. The CEO used authority to influence employees to take part in the fraud scheme. The public would see that the CEO utilized power to manipulate shareholders, which impacted their trust with WoolEx Mills (Cohen, Ding, Lesage, & Stolowy 2015) (Krishnan & Shah
Does racism still exist today? Although many believe it was a problem in the past, it still exists today. Many People are still not aware that it still exists in our workforces, especially in medical field. Although racism in medicine can be very offense, it can sometimes be beneficial and help reveal differences in diseases based on genetic make up. These differences can be taken in the wrong manner and can lead to social problems especially if these distinctions are thought of as ethnic differences. In Gregg M. Bloche’s article. “Race, Money and Medicine”, he states that we should erase racial categories from medicine but only use them if they are beneficial for the patient’s health. Peter Clark, author of “Prejudice and the Medical Profession: A Five Year Update”, explains that racial categories should be understood because understand these different can be beneficial. Lynne D. Richardson and Marlaina Norris, authors of “Access to Health and Health Care: How Race and Ethnicity Matter”, also believe that these differences can be beneficial but want to improve the health are because they know a majority of minorities do not receive proper health care and treatment. Rebecca Skloot, author of “The Immortal Life of Henrietta Lacks”, pays attention to the fact that her character, Henrietta Lacks, was not given the proper treatment and care she should have. Although Henrietta’s cells were beneficial to cancer research , she never once gave consent to the doctor’s to distribute her cells. She was taken advantage of because of her race and low income. Minorities’ opinions and beliefs should be taken into perspective because they often feel neglected which causes a sense of “distrust”. There has been a vast history of racism in the ...
Clients want accountants with integrity. Thus, integrity is critical to the public trust. As a matter of fact, one of the general definitions of integrity provided by the AICPA Code is that it is a quality from which the public trust derives. Also, it is an element of character fundamental to professional recognition, and it requires members to be (among other things) honest and candid within the constraints of confidentiality (Duska, Duska & Ragatz, 2011).
With every business activity come opportunities for fraudulent behavior which leads to a greater demand for auditors with unscathed ethics. Nowadays, auditors are faced with a multitude of ethical issues, and it is even more problematic when the auditors fail to adhere to the standards of professional conducts as prescribed by the American Institute of Certified Public Accountants (AICPA). The objective of this paper is to analyze the auditors’ compliance with the code of professional conduct in the way it relates to the effectiveness of their audits.
In the year 2002, Adelphia Communications Corporation faced a massive accounting scandal that led to company’s bankruptcy and later reorganization. This paper will attempt to identify, analyze and evaluate the consequences of misrepresentation of financial accounts on a company, industry and economic level. Moreover, it will attempt to examine factors influencing the corporate failure from an auditor’s point of view, and consider the measures that auditor could have taken in order to enable quality and completes of information communicated to external users.
Epistemology is purposed with discovering and studying what knowledge is and how we can classify what we know, how we know it, and provide some type of framework for how we arrived at this conclusion. In the journey to identify what knowledge is the certainty principle was one of the first concepts that I learned that explained how we, as humans, consider ourselves to know something. The certainty concept suggests that knowledge requires evidence that is sufficient to rule out the possibility of error. This concept is exemplified in cases like The Gettier problem in the instance that we suppose (S) someone to know (P) a particular proposition. As Gettier established the Justified True Belief as a conceptual formula for knowledge, certainty can be understood with the proper perspective and background. The certainty principle explains that knowledge requires evidence to be “sufficient” to rule out the possibility of error. This means that what we determine to be acknowledged as “knowledge” must present justification in order to be accepted believed as knowledge. This is important because Skepticism doubts the validation of knowledge and how we come to any such conclusion of justifying what we “know” indubitably as knowledge. This is the overarching problem with skepticism. Instead of having a solid stance on how to define knowledge, skeptics simply doubt that a reason or proposition offered is correct and suppose it to be false or flawed in some manner. See the examples below as identifiers of the skeptic way of life.
Introduction Within the current crisis of confidence in the public accounting profession after the Enron debacle and series of high profile failures of financial services firms, the issue of ‘audit expectation gap’ has never been more important. Though it would take an enormous amount of effort to address these issues, I will argue that tremendous amounts could be done in order to close the gap. In this essay, I will discuss some of these issues and in particular the strategies to reduce the gap. Definitions Various definitions have been proposed for the audit expectation gap.
...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.
The major characters of the tradition audit are all information what is needed by auditors are on the paper and the manual calculators and without high communication technology. Auditors usually were limited by the place in the paper time. When a several people are working on the same auditing project for a client with offices in cities across the country, even worldwide, it takes a lots all time those auditors get the information which they need from the client, even there is risk paper information disappear for many reasons. on the another hand, mail paper information increase the auditing cost. The mistake caused by the manual calculators inevitably, no matter how fixed auditors concentrate on recalculate is, after all auditors are human. The global business become major in the modern business world, some example, several auditors who are in different locations are working a same auditing project, or auditors are in different city even country with the client, when there is issue among these auditors or between auditors and client, they only can communicate with each other by phone or be together and have meeting. Phone call can not make sure information been watched in the same time when the voice is talking about the issue, but having a meeting takes time and money make all people together, it increases auditing cost.
...e financial reports and statements are correct. This auditing will be conducted by auditing department of the organization, even may be done by an independent auditor who is not part of the organization, and sometimes public officials are elected. In case of unmatched consequences the organization need to give explanation on the misrepresentation of wrong statements. Auditors purpose is then to ensure that the misrepresentations are corrected, then maintain accurate, reliable financial documents and statements.
Audit Risk is the risk that an auditor has stated an incorrect audit opinion on the financial statements. It may cause the auditors fail to alter the opinion when the financial statements contain material misstatement. The auditor should perform the audit to lower the audit risk to a sufficiently low level. In the auditor’s professional judgement, the auditor should appropriately state a correct opinion on the financial statement
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.