Corporate Governance and Auditors

In the Enron case, The Securities and Exchange Commission (SEC) and Congress conducted an investigation into Enron's collapse. The authorities re-examined the roles of corporate watchdogs, including corporate boards of directors, auditors, investment banks, credit rating agencies and lawyers. It could be that the watchdogs had too tight relations with the company's executives. That is why no one questioned the Enron's aggressive accounting strategies. To prevent such collapses, someone needs to look into the possible conflict of interest. The dilemma is that auditors should perform in the interests of the investors, but they are paid by the audited company, which makes it more difficult for them to exercise tough decisions. The auditors should not perform some particular consulting services for the firms that they audit. Another belief is that there should be more severe consequences for those committing financial crimes and causing fall of the companies.

Corporate governance explains the official rule and regulative parameters for controlling and overseeing the entity (Cascarino, 2012, pg. 131). Responsibilities following the audit committee include keeping up to date safe guards and flow of communication with the auditors (Dogas, C., 2015). Corporate governance clearly explains the “rules, processes, and laws under which entities are operated, regulated, and controlled and includes such the board of directors and the audit” (Cascarino, 2012, pg. 131). After the effects were felt of the first large fraudulent crime of Enron and WorldCom, “the United States enacted the Sarbanes-Oxley Act (SOX) with the plan to widen the duties of auditors, management, audit committees, and boards of directors” (Cascarino, 2012, pg.

Identify the control objectives that would be satisfied by the recommendations the internal auditors proposed during the 2014 audit. Explain how each objective would be met by the recommended procedures.

The benefits succeeded by the positive shock of the term of trade to the economy were visible. The exchange rate appreciation allowed for the reduction in the external debt and the increase in the prices of exports on investment for the production or raw materials was remarkable. Such prosperity came under threat in the second half of 2008 as are result of the global financial crisis (Maps of World).

The Auditors’ responsibility for the detection of fraud is an ongoing issue that is surrounded by much controversy (Gray, Manson and Crawford, 2015). It is believed by many people that Auditors are responsible to detect fraud and have the ability to do something about it, while In fact they have a very limited role in the detection of fraud. The public’s misconception of the auditors roll and what the auditors roll actually is, is referred to as the expectation Gap. In the auditing profession they often have to keep up to date with the up to date standards from the International standards on auditing, these are important, as they are required to keep up with the constant evolving of the rules and what is expected of them. These standards are often referred to as ISA’s, the main focus of these will be ISA 240, this is the standard that covers fraud, and plays a large part in the way auditors do their statements. Throughout this essay we will be able to critically analyse what role the auditors play in the detection of fraud and what the public believe the auditors role is.

This paper will reviews the extent to which corporate governance acts as efficient tool to protect investors against corporate fraud, thus contributing to summarize the literatures on role of corporate governance on preventing occurrence of corporate fraud. In a more recent study, corporate fraud is part of earnings manipulation done outside the law and standards. Whereas, the activities covered by the terms earnings management (such as income smoothing and big bath) and creative accounting (or window dressing) normally remain within the regulations. In this regard, corporate governance mechanism, particularly effective boards,

In a free and open market, listed companies are required by law to provide their stakeholders with financial information that is credible. One method that can be used to obtain a trustworthy and objective financial reporting is through statutory auditing. However, the recent financial scandals and crisis have renewed concerns regarding the tenure of auditors and its impact on their audit quality and independence. Regulators and other experts have become concerned that the familiarity created between management and auditors over time and the need to retain client firms weakens the independence of auditors, and adversely affect the quality of their audit reports (Arel 2013: 16). On the other hand, those opposing mandatory audit firm rotation claim that the costs incurred as a result of frequently changing auditing firms surpasse its benefits by far (Beasley et al., 2009:67). Pozen (2012:11) points out that the chances of audit failures are greater during the early stages of an auditor-client relationship since the new auditor may not have auditor knowledge regarding operations, processes, and client-specific risks. The role of audit firm rotation as a means of sustaining the independence and reliability of financial reporting will be discussed in the paper as well as the views of stakeholders regarding the rotation rule and make recommendations on how to improve audit quality and independence will be considered.

In most of the cases developed countries (e.g Norway, England, united kingdom, Switzerland, etcetera) tend to have a very strong currencies relative to the under developed or developing countries (e.g Mozambique, Rwanda, Angola, and etcetera) and also have a good currency stabilization, this essay shall explain why that is the case.

EXPLAIN THE RESPECTIVE ROLES AND RESPONSIBILITIES OF MANAGEMENT AND AUDITORS IN THE PREVENTION AND DETECTION OF FRAUD.

Statements prepared by company managers for their shareholders (Heang and Ali 2008). The general consensus achieved the primary objective of an audit function is to add credibility to the financial statement rather than on the detection of fraud and errors. This change in audit objective is evident in the successive edition of Montgomery’s Auditing text issued during this period which stated “An incidental, but nevertheless important, objective of an audit is detection of fraud.” (1934, p. 26). “Primary responsibility…for the control and discovery of irregularities necessarily lies with management.” (1940, p. 13). Hence, it can be witnessed that the shift of the focus of an audit function from preventing and detecting fraud and error towards assessing the truth and fairness of the companies’ financial statements began at this period (Heang and Ali 2008).

There is an essential contrariness between the achievement of worldwide monetary strength and having a single national currency play out the part of the world 's reserve cash. This is not another disclosure. However, occasions of a previous couple of months have brought this theme over into the spotlight.

European Monetary System (EMU) is the arrangement by following which most EU (European Union) nations have connected their currencies to put a stop to great changeability and vacillations relative to one another. It was in 1979 that this system was organized in order to soothe and stabilize the foreign exchange and respond to price increases among member nations. However, sporadic changes not only elevated the values of strong currencies but at the same time, lowered the values of weaker currencies. In order to maintain the currencies within a constricted range, modifications in national interest rates were used in 1986. Later in the earlier phase of 1990s, the conflicting economic policies and conditions of its members sprained the EMU ("European Monetary System," 2009).

The purpose of this paper is to highlight the role of external auditing in promoting good corporate governance. The role of auditors has been emphasized after the pass of the Sarbanes-Oxley Act as a response to the accounting scandal of Enron. Even though auditors are hired and paid by the company, their role is not to represent or act in favor of the company, but to watch and investigate the company’s financials to protect the public from any material misstatements that can affect their decisions. As part of this role, the auditors assess the level of the company’s adherence to its own code of ethics.

Macroeconomic pointers are measurements that demonstrate the present status of the economy of a state contingent upon a specific range of the economy (business, work business sector, exchange, and so on.). They are distributed frequently at a sure time by administrative organizations and the private sector. In truth, these insights help Forex merchants screen the economy 's heartbeat; hence it is not shocking that these are religiously trailed by practically everybody in the monetary markets. After distribution of these pointers we can watch unpredictability of the business sector. The level of instability is resolved relying upon the significance of a marker. That is the reason it is imperative to comprehend which

An audit is ‘an independent examination of, and the subsequent expression of opinion on, the financial statements of an organization’ (Hussey, 1999, p. 33). The audit can be viewed as an integral part of corporate financial reporting, where the assurance it provides stems from the trust placed in the judgement of the auditor. The audit is designed to demonstrate ‘the completeness, accuracy and validity of transactions which, when aggregated, make up the financial statements’ (Power, 1997, p. 24).