Essay on auditors independence

Auditor Independence – 2

To check this activity external auditors are hired by the company. Journal of Business Ethics, pp.

Safeguard of Auditor Independence

Investor confidence is eroded if investors and other users of the financial statement information do not perceive that the auditor was independent in both fact and appearance. Accidentally, false judgment enters the audit reporting without conscience.

While we do not know that any of these suggestions would be optimal, we believe we have made a convincing case for reform of the current auditing relationship. Auditor independence in this case study comes from the fact that Arthur Andersen received more money from the non-audit services they provided Enron as compared to the audit-related services.

Auditor independence helps to ensure quality audits and sustain the circulations of investment with the capital market.

Real independence refers to the actual independence of auditor, also known as independence of mind.

Independence of External Auditor

The Importance of Independence in relation to the provision of assurance The value of audit derives entirely from its independence.

The financial audit remains an important aspect of the corporate governance that makes management accountable to shareholders for its stewardship of a company. In the wake of these scandals, it is necessary that research be carried out into the field to try to establish how best threats to auditor independence can be mitigated Piskar, In the foreseeable future, keeping prohibition on non-audit services would help medium-sized accounting firms secure additional non-audit work with major clients.

Qualitative analysis helps the researcher gain a better understanding of the field they are exploring and get a broad perspective of the field. Without the strength of character to withstand such pressure, auditors may be unable to express independent opinions.

As evidenced by the case studies in this proposal and many more scandals that have hit different companies, failure of auditor independence can have far-reaching consequences. Inaccurate interpretation of data leads to misleading conclusions.

The rewards participants get in the exercise expose them to difficulty in liberating themselves from bias. The fundamental importance of auditor independence. Lousteau and Mark E.

In many circumstances, auditors consider the people who might be hurt by their independent opinion on the financial statement. The regulations include an amendment directive that lays out the frameworks for audits, enhances public oversight on auditing and a basis for coordination between corporate authorities in the EU.

Impossibility of Auditor Independence

Competitiveness Previously, junior auditors basic wage rate were at a ratio of four times the cost of the employee. Conflict often arises in the when the agent deviates from the targets of their hiring to pursue their personal interests leading to agency loss Li.

The Need For Auditors Independence Accounting Essay The issue of auditor independence is a crucial element and very important for the audit profession. This concept has been discussed widely and many definitions have been presented in literature.

Auditor Independence: An Impossible Dream In recent months there has been much discussion about the independence of CPA auditors; the leadership of the AICPA, the Auditing Standards Board, the Public Oversight Board, the Independence Standards Board, and most recently the proposed independence rules promulgated by the SEC have all attempted to clarify and strengthen auditor independence.

Auditor independence refers to the auditors being free of any relationships with the client organizations that may influence their opinion while conducting the audit.

This is necessary for both internal and external auditors to ensure they provide shareholders with a professional and unbiased opinion. Threat To Auditor Independence Accounting Essay. In almost all countries auditing, as a profession, is becoming very demanding. Auditor independence has long been regarded as a cornerstone of the auditing profession (AICPA ; SEC ).

Essay on auditor independence Auditor Independence: An Impossible Dream In recent months there has been much discussion about the independence of CPA auditors; the leadership of the AICPA, the Auditing Standards Board, the Public Oversight Board, the Independence Standards.

The issue of auditor independence is a crucial element and very important for the audit profession. This concept has been discussed widely and many definitions have been presented in literature.

Essay on auditors independence
Rated 0/5 based on 76 review
The Importance of External Auditor’s Independence Essay Example | Graduateway