...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 specialize in...
Words: 377 - Pages: 2
...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...
Words: 1588 - Pages: 7
...threat to auditor independence is the inherent economic bond that exists between auditors and their clients. The livelihood of an auditor, and their firm, is directly related to the exchange of services for money. The bond creates inherent risk that an auditor could compromise their independence to keep or gain the business of a client. Companies commonly only want a standard unqualified opinion and pressure the auditors to be flexible in order to gain a clean opinion. It is the auditor’s job to remain independent and unaffected by the pressures put on them by management. This, however, can be very hard to do when management threatens the auditor with termination. The size of a firm can change how high or low the risk is. Larger firms will be less dependent on a single client and will put out a higher quality report. Because these firms are so big and have a wide client portfolio, they risk more by doing inadequate work than they do losing a client. Inversely, small firms that have less clients will feel more pressured to keep a client based on how much the revenue stream of the client affects the firm. Aside from the fee revenue received from the client, there is also the positive appearance gained from having an important client. Occasionally, just having a certain client associated with the firm can be just as important as their fee revenue. Although clients are important to the firm as a whole, specific clients are likely to be more important to an individual auditor. While...
Words: 497 - Pages: 2
...Summary of The Auditor The Auditor by James K. Loebbecke tells a story about the life and career of an auditor named Jack Butler. The book shows Jack’s career from his education all the way to his promotion to partner. Loebbecke designed this story about Jack as a teaching tool to give students an understanding about the life of an auditor. The story begins with Jack’s promotion to partner and how it was bittersweet for him. Jack is excited for the promotion, but is also nervous about the extra responsibility partners have and the stress it can bring on family life. He is also upset because his friend Don was considered for the promotion too, but was turned down. In these chapters, Loebbecke shows the good and the bad that comes with partnership. There are financial rewards and prestige, but also potential strain on friendships and family. For the rest of the book, the author unfolds the events that take Jack closer to his partnership with The Firm. After Jacks promotion, the story goes back in time and shows all the events that led to the promotion. It begins with Jack’s education and then to recruitment at The Firm. During Jack’s college years he gets advice from his father and Wally Garner, a faculty member. At that time Jack takes an interest in accounting and Wally takes Jack underneath his wing and gives Jack advice in planning a career in accounting. Wally gives Jack great advice on the differences between MBA versus MPrA and the differences between the...
Words: 1585 - Pages: 7
...The auditor’s responsibilities for detecting fraud are to perform risk assessment procedures, such as inquiries of management and others, analytical procedures, and observation and inspection. Then the auditor must develop tests to determine any misstatements in the account balances or transactions. In order to identify the risks of material misstatements, the auditor must discuss with the audit team in regards to the risks of material statement due to fraud, inquire of management about the risks of fraud and how it is addressed, consideration of any unusual or unexpected relationships when performing analytical procedures, and understand the client’s period-end closing process and investigate unexpected period-end adjustments. The three conditions that are generally present when fraud occurs are management or employees have an incentive or are under pressure to commit the fraud, an opportunity to carry out the fraud, and those who commit the fraud are able to rationalize committing a fraud. In addition, individuals possess an attitude that allows them to intentionally commit the fraudulent act. The objective of brainstorming meet is to talk about the entity’s financial statements’ susceptibility to material misstatements. In depth, their objectives are to share insights about the entity, its environment, and the entity’s business risks, discuss how and when the entity is susceptible to fraud, and emphasize professional skepticism while performing the audit. The documents needed...
Words: 303 - Pages: 2
...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 making...
Words: 824 - Pages: 4
...“Management Consulting Service” (MCS). While there is no particular restriction for the scope or classification of non-audit service, diverse classification methods have been employed by the researchers (Schemer and Kiger, 1982; Pany and Rechkers, 1983). Purcell and Lifison (2003) defined non-audit services as traditional CPA works (including assurance, investment assurance, and commerce registration and accounting affairs, and so on), as well as, tax advisory service, management advisory service, finance and investment advisory service, and information technology advisory service. The fundamental concept of professional independence is an attitude of the 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...
Words: 844 - Pages: 4
...The purpose of an independent auditors’ report is to communicate the opinions of the independent auditors about the financial statements of the company they audited to the public. However, there have been an issue on the communication of the independent auditors’ report as the message intended to be brought forward by the preparers are misinterpreted or confused by the users (Asare and Wright, 2009). The reason for such misinterpretation and confusion by the users of the independent auditors’ report is mainly the use of technical language. For example, from the independent auditors’ report in the annual report of SP Setia Berhad 2012, it was mentioned that the audit was carried according to approved auditing standards in Malaysia. However, it does not clarify which standards are being applied during the course of auditing. The misinterpretation arose from the use of technical language also lead to an expectation gap in the nature and responsibilities of the independent auditors and the public’s expectation of them (Enyi, Ifurueze and Enyi, 2012). Again, example can be obtained in the annual report of SP Setia Berhad 2012. In the independent auditors’ report, it was stated that the auditors perform the audit to get “reasonable assurance” that the financial statements do not contain material misstatement. However, the word “reasonable assurance” may hold different meanings for different individuals. By utilising these words in a report, people will have different perception of...
Words: 1258 - Pages: 6
...The Impossibility of Auditor Independence Introduction: * Investors seriously rely on audited F.S. and auditor integrity. * Audit firms face lawsuits from investors, paying judgments and settlements for their involvement in financial reporting process. * Audit failures rarely result from the deliberate collusion of auditors with client. Instead, auditors may find it psychologically impossible to remain impartial and objective. * AICPA: auditors should achieve a level of independence * Courts’ view: auditors must act in the interest of external users of F.S. * However, such impartiality is impossible under current institutional arrangements. The Structure of the Auditing Relationship External users: Stockholders, financial advisers, regulators, lenders, creditors, etc. Client (audited firm): has incentives to present the “best” F.S. Hires and pays Represents Independent auditor: Give an opinion on F.S. * Through an qualified audit report, management provides external users a reasonable assurance. * Economic incentives also may bias an auditor’s judgment. The Psychology of the Impossible of Independence * Model of auditor psychology: Assumption of deliberativeness: any tendency towards bias can be rectified by moral suasion and/or the threat of sanctions. * Psychological research: the Model is unrealistic. * “self-serving” bias: when presented with identical information, individual perceptions of a situation...
Words: 341 - Pages: 2
...An accountant is a practitioner of accountancy or accounting, which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resources. Auditor is the person appointed to conduct an examination of the records, to form an opinion about the authenticity and correctness of such records, by verifying the correctness and reliability of the recorded transactions from the evidences available, opinion and inference reachable based on his expertise 1 . Duties and responsibilities of accountant 1. Prepare profit and loss statements and monthly or yearly closing and cost accounting reports. 2. Compile and analyze financial information to prepare entries to accounts, such as general ledger accounts, and document business transactions. 3. Establish, maintain, and coordinate the implementation of accounting and accounting control procedures. 4. Analyze and review budgets and expenditures for local, state, federal, and private funding, contracts, and grants. 5. Monitor and review accounting and related system reports for accuracy and completeness. 6. Prepare and review budget, revenue, expense, payroll entries, invoices, and other accounting documents. 7. Analyze revenue and expenditure trends and recommend appropriate budget levels, and ensure expenditure control. 8. Explain billing invoices and accounting policies to staff, vendors and...
Words: 2363 - Pages: 10
...Auditors and Regulatory Oversight Raquel Avila ACC 403 Auditing Professor Dawn Carter May 8, 2015 The purpose of most businesses is to provide a service or product, and to make a profit while doing so. Businesses have many stakeholders, such as investors, board of directors, and employees. Even customers can be stakeholders if they really enjoy a service or product that they get from that particular business and don’t want them to go out business. Unfortunately, the desire to make a profit can cause some business owners or upper management to act in unethical ways and attempt to circumvent the rules and regulations imposed by the U.S. Securities and Exchange Commission (SEC). The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation (sec.gov). One of the acts enforced by the SEC is the Sarbanes-Oxley Act of 2002 (SOX). This act places strict rules on public companies with regard to the information being reported on the company’s financial statements. Its emphasis is to protect investors and related parties from potential loss by placing the responsibility of providing accurate information on upper management and company officers. This act is also responsible for the creation of the Public Company Accounting Oversight Board (PCAOB), which oversees the activities of the auditing profession. With all of these regulations in place, one would...
Words: 1164 - Pages: 5
...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 exposed to during...
Words: 676 - Pages: 3
...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 credibility and the reliability of the financial statements are compromised, violating the key objective of accounting: providing investors with relevant and reliable information (Whittington, Rany, 2014). Objectivity The AICPA Code of Professional Conduct requires auditors to be objective meaning that auditors should maintain a position that is free of conflict of interests and potential...
Words: 5991 - Pages: 24
...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...
Words: 3700 - Pages: 15
...Brief on an Internal Auditor Recommendation Robin Block ACC/544 July 2, 2012 Brief on an Internal Auditor Recommendation An internal auditor can be beneficial to help alleviate the challenges being experienced in your company with internal controls and accounting functions. Internal auditing can provide added value and improve your company’s operations (The Institute of Internal Auditors, 2012). By hiring an internal auditor your company can maintain effective internal controls and reduce business risks (Lehman Brown, 2009). Benefits Your company can enjoy the benefits of having an in house auditor. An internal auditor will be familiar with the culture and direction of the company allowing the auditor to have some foresight in risks that could come. The Internal auditor will work independent from any management within the company, to ascertain the risks, evaluate the risks and report a recommended procedure or policy to mitigate any risk. ” Internal auditors make recommendations that result in additional profits or cost savings for their companies” (Louwers, Ramsay, Sinason and Strawser, 2007, p. 628). The auditor can conduct a number of different audits which can be an advantage the company. A compliancy audit of the HR department can reveal if the company is in compliance with Federal and State labor laws and fair hiring practices. An operational audit can help management understand and execute responsibilities more affectively and improve profitability...
Words: 557 - Pages: 3
