Auditors And The International Financial Reporting Standards

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Introduction: Auditors, accountants, and companies must comply with the regulations as recommended by the International Financial Reporting Standards (IFRS). Disputes concerning convergence issues and compliance may arise between companies and the auditors. In the case of dispute, the companies and the auditor should consider alternative dispute resolving mechanisms which are faster, less expensive and less adversarial than traditional litigation.
Reason for Conflict: Audited financial statements may be a source of dispute between the auditor and management. The process of audit resolution would entail negotiating them. Knapp (1985, p. 202) proposes the way that auditors approach these conflicts play a big role on the auditors independence and the content of the results and the credibility of the financial statements. Controversy threatens the success of the firm, resolving controversy will help reduce the agency cost hence minimizing the expenses to be incurred. Resolving audit disputes would also be serving the interest of the shareholders.
Areas of Dispute: Audit disputes may arise in areas such as fraud investigations, malpractice claims, fee disputes, the purpose of internal auditors and the appropriate application of the accepted accounting practices.
How The Conflict Arises: In these cases, auditor’s must inform their clients about their roles and the responsibility of the companies accounting function against those of the external auditors. When the auditor
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