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Auditor’s Role: The Importance to Overcome Ethical Dilemmas Essay example

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Throughout the years, the news covered stories of corporate scandals involving accounting unethical practices. These unethical corporate acts had a tremendous negative impact on these company’s stockholders, investors, employees and the whole U.S. economy. Most of these scandals would have been prevented, if the independent audits of these companies were conducted in an ethical manner. With this in mind, two corporate scandals will be the subjects of further review to understand that an auditor might encounter ethical dilemmas, if independence and objectivity are not part of the audit process.
An auditor should keep objectivity at all times. Maire Loughran, a Certified Public Accountant and University Professor, explains “objectivity
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It appears evident, based on the information above; the auditor in this case had more than a reason to engage in unethical behavior, and to fail to perform his duties as an auditor. Friehling had a conflict of interest. The auditor seemed to have made a decision, ahead of time, that it was on his own best financial interest, to keep signing off audit reports to maintain the image of his client’s company. The auditor probably thought this action would ensure Madoff’s company to continue operations. Furthermore it would guarantee ongoing future investments returns for his own investments with Madoff’s company, as well as the investments of his family. Also, it would allow him to receive professional fees, in a steady manner, for a job he had no intention to honor, and he made no effort to perform.
An auditor needs independence to perform an unbiased audit. According to Iain Gray and Stuart Mason, an audit is an informed opinion, based on truthful and fair information provided by the interested party whom should be independent of the preparer/auditor (21). Based on this definition, an auditor must self-distance from the subject of the audit. An auditor must refrain to engage in other roles within the management of the company that is audited, in order to avoid intentional or unintentional interference, which consequently could jeopardize the independence of the auditor’s
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