Audit Disaster Futures: Antidotes for the Expectation Gap

Independent audit in turn makes the financial statements more credible and reliable source of information

Legitimacy in accounting practices is ensured by the check and balance of having independent auditors from registered public accountant firms reviewing financial practices. The report features eleven sections and these sections pertain to accounting overview, independence of auditors to reduce interest conflicts, corporate responsibility, financial disclosures, tax returns, criminal fraud and various elements of white collar criminal activity (107th Congress

The Model of Trust Enhancement was established to enhance and maintain the public’s trust in the accounting profession. Over the last two decades, the ethics of the accounting profession has been questioned and public trust destabilized, in particular for auditors, due to the Enron debacle. The fact that an auditing firm would assist their clients with publishing an inadequate set of financial statements shows their willingness to violate laws and regulations (Sims & Brinkmann, 2003). According to the textbook, “Because trust is essential, even the appearance of an accountant’s honesty and integrity is important. The auditor, therefore, must not only be trustworthy, but he or she must also appear trustworthy” (Duska, Duska & Ragatz, 2011, p. 116). The majority of statements filed inadequately have a substantial impact on the credibility of the accounting profession as a whole. Sullivan (n.d.10) states that a CPA must possess a high level of trust, by applying professional judgment and enhancing the three trustworthy characteristics (ability, benevolence, and integrity) when resolving accounting ethics dilemmas (slide 3).

Prior to the terror attacks in 2001, the predominant thought processes for businesses in the private and local sectors was to continue generating money. By having this narrow-minded approach, these establishments were placing themselves in danger by not being prepared for a disaster, whether that would be man-made, weather or another type. According to Fisher (2004) in our attend section this week, after the 9/11/01 attacks, many businesses were left in dier need of assistance as they had not planned for such a catastrophe. There were several businesses that ended up going out of business. One in particular, lost its entire workforce in the attacks and had to start over, from nothing. Following the old adage that “hindsight is 20/20”,

Arens, A. A., Elder, R. J., & Beasley, M. S. (2006). Auditing and Assurance Services (11th Ed.). Prentice Hall, Upper Saddle River, NJ: Pearson Prestice

a. A third-party user cares whether the auditor is independent so that the user could evaluate the credibility of the financial statements and determine whether or not to rely on the financial statements to make investment or business decisions. In addition, through assessing the auditor’s independence, the stakeholders could also better evaluate the performance of the management and the value of the audit work.

Abstract: On October 11, 2011, the Public Company Accounting Oversight Board (PCAOB) proposed a new rule. The rule is meant to name the engagement partner and other key participants who play a role in preparing audit reports. PCAOB believes that new rule would help to get more information and would be useful to investors, creditors and other financial statements users. After six years of debate over the intended and unintended consequences the PCAOB concluded and issued the rule on December 15, 2015.The objective of my research was to reflect my expectations for the consequences, both intended and unintended of the Public Company Accounting Oversight Board of the new rule. The PCAOB’s final article “Improving the transparency of audits: Rules to require disclosure of certain audit participates on a new PCAOB form and related amendments to auditing standards” release No. 2015-008 issued on December 15, 2015 was very crucial for my research because it gives first hand perspective of the new rule.

Disasters have become an inevitable part of businesses and organizations as well. They not only have a major effect on business and organizational continuity; they also result to an overhaul in organizational operational mechanisms (Awasthy, 2009). It is for this reason that many organizations and business resort to preparing business continuity plans and disaster recovery plans that will facilitate better disaster management in future. Effective disaster recovery plans are important to every business and organization (Thejendra, 2008).

The emergency management profession has developed the concept of the disaster cycle as a basis for disaster management. The disaster cycle has four distinct yet interrelated phases: Mitigation, Preparedness, Response, and Recovery. The concept of the cycle implies an ongoing process in which communities, businesses, and individuals plan for and reduce potential disaster losses. Historically, emergency management programs have focused heavily on the preparedness and response phases, leaving limited resources to address the recovery and mitigation phases. This research paper will discuss the basic goals of post-disaster hazard mitigation and identify areas of concentration when developing strategies and making recommendations towards reducing and eliminating the impact of future disaster events through a post-disaster redevelopment plan.

According to ICAEW, auditor independence mainly refers to the independence of the external auditor from parties that have an interest in the financial statements of the business being audited. It requires having both integrity and an objective manner to the auditing process. In order for the concept to be deemed effective the auditor needs to carry out their work freely. One of the main purposes of auditing is to increase credibility of the entity’s’ financial statements, as they have expressed their own professional opinion on the truth and fair view in accordance with the proper accounting standards used. This is only possible if the audit is made with reasonable assurance that it has come from an independent source and has not been influenced by other parties, such as managers, directors or by conflict of interest.

The onset of a disaster is not an ideal time to plan. Only, few organizations take a proactive position, from the CEO on down, making Business Continuity a daily need for the whole association (Christian, n.d.).

Since reliable financial information is essential for investors and other stakeholders to take adequate decisions, this reliability must be backed by independent review performed by independent and certified auditing firms, which are supposed to verify and certify financial statements issued by a company’s management. If the auditor is not competent and independent from management, the audit of the financial statements loses its credibility (Schelker, 2013, p.295). According to Impastato (2003), because of audit failures, accountants are to blame for investors losing billions of dollars in earnings in addition to market capitalization (as cited in Grubbs & Ethridge 2007).

On August 29, 2009, Hurricane Katrina struck the United States Gulf Coast. It was a Category 3 Hurricane, according to the Saffir Simpson Scale. Winds gusted to up to 140 miles per hour, and the hurricane was almost 400 miles wide . The storm itself did a tremendous amount of damage, but the storm’s aftermath was cataclysmic. Many claimed that the federal government was slow to meet the needs of the hundreds of thousands of people affected by the storm. This paper will examine the four elements of disaster management – preparedness, response, recovery, and mitigation – as well as an analysis on the data presented.

This includes the indirect ability of management to influence the career prospects of internal auditors, as well as the budget and planning of the internal audit function. This is exacerbated by internal auditors themselves using the function as a stepping stone to advance their career objectives. It also can be argued that the independence theory may be lost in such a culture, especially if it is combined with people within the organization perceiving internal auditors as partners, thereby subjecting the internal audit function to pressures threatening its independence, rather than recognizing the internal audit function as an independent assurance function("A Critical Analysis Of The Independence Of The Internal Audit Function: Evidence From Australia: Accounting, Auditing & Accountability Journal: Vol 22, No

The aim of this essay is to study the function of external auditors in order to analyze why it is important to be independent. The primary mission of external auditors is to review and evaluate all the financial records of a company or corporation. They provide an objective opinion on the organization’s financial statement and effectiveness of the accounting polices in order to help management to make decisions. If the independence of the external auditors is impaired, the public will doubt the quality of professional auditing services, and the consequence would be very serious, just like the bankruptcy of Enron led to the disorganization of Arthur Andersen, once a giant accounting company in the world. In order to maintain and increase