Auditors in the Business World

1642 WordsJul 12, 20187 Pages
Accounting is the process of identifying, recording, and communicating the economic events of an organization to interested users to make sound decisions. In accounting identifying economic events involves selecting the economic activities related to a particular organization such as paying out salaries to employees of a particular entity. In turn, once these economic activities have been identified they are recorded in the books daily into a systematic system measured in dollars. These economic events are then classified and summarized by an accounting system. The data gathered from the economic events are then translated into financial statements and communicated to internal and external users interested in the economic health of the…show more content…
SOX considered one of the most important bills passed by law to this day, established the Public Company Accounting Oversight Board (PCAOB), which is overseen and monitored by the Securities and Exchange Commission (SEC). “The PCAOB provides oversight for auditors of public companies, establishes auditing and quality control standards for public company audits and performs inspections of the quality controls at (CPA) firms performing those audits” (Arens, et al, 2010). The SEC ensures that PCAOB performs accordingly with overseeing, examining, regulating and penalizing auditors of publicly traded companies. As a result it validates an auditor’s opinion on an audit report because it give creditability and reliability to the information that is audited. Auditing is defined as the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria (Arens, Elder, & Beasley, 2010). In order to perform an audit there has to be information in which there is a form to validate and a criteria an auditor has to adhere to in order to evaluate any information whether it be financial statements, federal income tax returns, the efficiency of accounting systems, and proficiency of business operations. Obviously the criteria for evaluating information vary
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