...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 governance...
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...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...
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...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 of the Companies...
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...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 accounts...
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...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, oluwagbemiga@in.com Follow this and additional works at: http://digitalcommons.unl.edu/libphilprac 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. http://digitalcommons.unl.edu/libphilprac/517 THE ROLE OF AUDITORS IN FRAUD DETECTION, PREVENTION AND REPORTING IN NIGERIA OYINLOLA OLUWAGBEMIGA oluwagbemiga@in.com 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 prevention, detection...
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...Adequacy of Legal Protection for Auditors Loganathan Krishnan Department of International Business, Faculty of Accountancy and Management, Universiti Tunku Abdul Rahman, loganathan@utar.edu.my This paper was presented at the International Conference on Emerging Issues in Public Law: Challenges and Perspectives, Faculty of Law, Universiti Teknologi MARA (UiTM), 13th to 14 December 2011, Shah Alam, Malaysia. ABSTRACT In Newton v Birmingham Small Arms Co (1906), the English court made it clear that the rights of auditors cannot be abridged nor restricted by any regulations of the company. This is to ensure that the auditors’ rights are secured. The rights are unqualified and this will enable auditors to discharge their role and duties effectively. Additionally, the Companies Act 1965 (CA) gives substantive powers to enable auditors to carry out their duties effectively. This is because if their hands are tied, they will not be able to uncover any wrongdoings by the company’s management. In fact, any one who obstructs their duties, is in breach of the CA. Auditors have a right of access at all reasonable times to the accounting records and other records, including registers of the company. Moreover, the CA provides that auditors enjoy qualified privilege in certain circumstances. Thus, this study investigates imperative issues on the office of auditors concerning rights, powers and privilege. This is to strengthen the role and duties of auditors to bring about a more meaningful...
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...1 INTRODUCTION 1.1 Research Background The auditor’s roles are to provide an opinion on financial statement and to ensure that the statements are based on true and fair image of company performance to the stakeholders. They are authorized in checking the accuracy of business records. Opinions given by the auditor gives an added credibility to the financial statements (Maqableh, 2014). Commonly, investors often rely on financial statements provided by auditor in making investment judgement and increase the productivity of financial markets. Financial statements provided by the auditors are often reviewed as credible, unbiased opinion that truly reflects the company financial positions. There’s no doubt that auditor independence is the core of auditing profession when establishing its objectivity and integrity. Auditor independence, in particular, indicates the ability of an auditor to disregard any influence or control when conducting an opinion (AAA, 1973). Therefore, auditor must be, and must be seen to be independent of company management. Lack of independence causes audits to be considered to have little value (Johnstone, Sutton, & Warfield, 2001). This is further supported by Elliott and Jacobson (1998) that a particular interest may trigger a risk that could weaken the outcome of the audit which in turn impairs the auditor independence. Hence, independence is fundamental to the purpose served by auditors (Moore et al., 2002). This study is limited to only four...
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...of protecting the interests of its stakeholders from any type of loses incurring. To begin with, firstly there are three types of auditors in the corporate governances, internal, external and government auditors. The role of the internal auditors in the corporate governance is to evaluates corporate activities, controls or procedures and ensures that they are adequate and in compliance with senior management's recommendations and human resources guidelines. An internal audit also helps a firm adhere with regulatory standards and industry practices.An internal auditor evaluates a firm's processes, "controls" and mechanisms to ensure that they are "adequate" and "functional". A control is a group of instructions that top management puts into place to avoid losses due to human error, technology breakdowns or fraud. A "functional" control provides corrections to internal problems. A control is "adequate" when it clarifies instructions for job performance and problem reporting. An auditor also ensures that a firm's activities and controls abide by government mandates or industry regulations. (Codjia, 2013) Moreover the role and responsibility of an external auditor is to provide assurance to the general public regarding the truth and fairness of the information presented in the audited reports of the client's financial statements. External auditors are employees of a public accounting firm which has been engaged to conduct the audit of a particular company's financial statements...
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... Dr. Azham Md. Ali & Shamini Kandasamy 18 ACCOUNTANTS TODAY • February 2008 Towards Reducing the Audit Expectation Gap: Possible Mission? The auditing profession believes that the increase in litigation and criticism against auditors may be due to the audit expectation gap. The audit expectation gap is defined as the difference between what the public expects from an audit and what the audit profession accepts the audit objective to be. The audit expectation gap is critical to the auditing profession because the greater the unfulfilled expectations of the public, the lower the credibility, earning potential and prestige associated with the work of auditors. The objective of this paper is to review and evaluate some of the possible solutions that can be taken to narrow the gap. The study found the proposed solutions in the literature are unlikely to be implemented in view of the practical issues identified. Hence, the proposed solutions are only likely to be effective on theoretical grounds. It is hoped that this paper will provide some insights into proposed solutions which will enable the audit expectation gap to be reduced in a comprehensive and effective manner. E xternal auditing plays an important role in contributing to the effectiveness and efficient functioning of business operations, the capital markets, and the economy by adding credibility to financial statements (Rezaee, 2004). The reliability of auditing functions and the professionalism...
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... Dixon, Woodhead, Frank, Lowe, and Smith, have continued to investigate the existence of the expectation gap and its complications. The audit expectation gap exists when the public user and auditors have different beliefs about what an auditor’s responsibility should be. In the past few years, auditors have been unwillingly placed in the spotlight. The expectation gap has affected and deteriorated accountants’ credibility. The reason to this is that public users have expectations from auditors, for example, Salehi says, “the primary responsibility of an auditor is to verify whether the financial statements exhibit a true and fair view of state of affair of the business and their secondary responsibility is the prevention and detection of errors and frauds” (Salehi 2008, p. 65). These expectations by the public users increase the legal liability and credibility facing the audit profession (Ojo, 2006), and lastly, it lowers their earning potrantion and reputation associated with the work of auditors (Lee, Ali & Kandasamy 2008). Yet, the profession have been trying to decrease the disparity (Epstein and Geiger 1994). However, the expectation gap is not something that can be placed on the profession’s shoulders alone (Pierce and Kilcommins 1996), since the nature and roles of the auditors are differently perceived by users. It is obvious that previous research that have been done on the expectations problem is significant. It is not surprising that it has become significant...
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...journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/0268-6902.htm The changing role of the auditors R. Jayalakshmy, A. Seetharaman and Tan Wei Khong Faculty of Management, Multimedia University, Cyber Jaya, Malaysia Abstract Purpose – To highlight the pressures that the auditors would face in the era of globalisation and the challenges they should be willing to accept in order to maintain trust and integrity. Design/methodology/approach – A wide range of articles and journals published in international journals as well as local journals has been reviewed. The areas covered include audit fraud, true and fair view interpretation, auditor independence and role of internal auditors. Further, ideas have also been obtained from critical write-ups in the business magazines on the fall of multinationals. Findings – A wide range of interpretation has been given by various groups of people on their understanding of the phrase “true and fair”. This has created great confusion as to the interpretation of the audit reports. This has been proven by the fall of many multinationals and the audit pioneers, Andersens. This is one of the causes of audit fraud and it is also seen that as the auditors face an enormous challenge as they enter the twenty-first century, they should be willing to change their attitudes towards their clients. Professionalism should be in the forefront, and an...
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...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 required...
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...Auditor Independence - Its Importance to the External Auditor's Role in Banking Regulation and Supervision Marianne Ojo Oxford Brookes University - School of Social Sciences and Law; The Institute for Business and Finance Research, LLC; Covenant University January 1, 2006 Abstract: The role of the external auditor in the supervisory process requires standards such as independence, objectivity and integrity to be achieved. Even though the regulator and external auditor perform similar functions, namely the verification of financial statements, they serve particular interests. The regulator works towards safeguarding financial stability and investor interests. On the other hand, the external auditor serves the private interests of the shareholders of a company. The financial audit remains an important aspect of corporate governance that makes management accountable to shareholders for its stewardship of a company. The external auditor may however, have a commercial interest too. The debate surrounding the role of external auditors focuses in particular on auditor independence. A survey by the magazine Financial Director shows that the fees derived from audit clients in terms of non-audit services are significant in comparison with fees generated through auditing. Accounting firms sometimes engage in a practice called low balling whereby they set audit fees at less than the market rate and make up for the deficit by providing non audit services. As a result...
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...corporation’s implementation of good business practices and adherence to laws and regulations in the administration and operations of the company. The Sarbanes-Oxley Act revised a significant portion of the federation securities laws which had been in place for 60 years already (Sarbanes-Oxley Information). Before SOX, there is a self-regulation in the accounting profession whereby the Securities and Exchange Commission was “given statutory authority to set accounting standards and oversight over the Activities of the auditors…the role of establishing standards was left to the accounting profession” (CPCAF). One of the key changes in internal audits is that the “Act requires all financial reports to include an internal control report” (Sarbanes Oxley Basics). The key is the provision of adequate controls so that the company is confident about the financial statements that they are producing. The controls are in place so that the financial data of company is safeguarded. The role of auditing firms is to attest that the assessment of internal controls is effective. Examine an auditing issue that is impacted by Sarbanes-Oxley....
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...HISTORY The increasing complexity of modern business and other organisations has created the need for a specialist in various business controls: the internal auditor. We can understand better the nature of internal auditing today if we know something about the changing conditions in the past and the different needs these changes created. What is the earliest form of internal auditing and how did it come into existence? How has internal auditing responded to changing needs? As the operations of an organisation become more voluminous and complex, it is no longer practicable for the owner or top manager to have enough contact with all operations to satisfactorily review the effectiveness of performance. These responsibilities need to be delegated. The Development of the Profession of Internal Auditing Internal auditing has evolved from accounting-oriented to a management-oriented profession. At one time, internal auditing functioned as a junior to the independent accounting profession, and attesting to the accuracy of financial matters was the profession's main concern. Now internal auditing has established itself with a far broader focus. Modern internal auditing provides services that include the examination and appraisal of controls, performance, risk and governance throughout public and private entities. Financial matters represent only one aspect of the purview of internal auditing. Requirement to have Internal Audit Activity In January 2004, the...
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