Ethical Requirements for Auditors

1212 Words Aug 20th, 2011 5 Pages
A. It is extremely important to ensure that the auditing profession meets its responsibilities to its clients. While working for a company to audit their financial information, they are also at the same time working for the public and regulators who rely on externals auditors to prove credibility to the financial information that companies release (Cooper, Coram, Richardson, & Leung, 2009). To assist in quality assurance, the profession, and government have developed multilevel framework which is designed to regulate the audit profession. This framework includes: * Ethical standards: the New Zealand Institute of Chartered Accountants Act 1996 requires that NZICA have a code of ethics that governs the professional conduct of its …show more content…
In terms of compliance with ethical requirements, Rule 1 under integrity in the code of ethics says that, a member must not engage in any business and/or activity that may impair his or hers integrity or that of the profession (NZICA, (a) 2006). As GML has been named in a anti-corruption inquiry, such activity may relay back onto the auditors for not prying deep enough into the company’s financial records, thus hurting the integrity of the auditor.
In considering the integrity of the client, the same incident of the anti-corruption inquiry can be used to suggest that GML does indeed lack integrity, also, the reason for the managing director approaching our firm because he is unhappy with the present audit partner may have something to do with incident, and would be wise to seek information from the current auditing firm (NZICA, (a) 2006).
On the matter of the managing director of GML approaching our firm to accept the appointment of auditor to the company, the managing director does not have the legal power to choose a new auditor if he is unhappy with their current one. The appointment of an auditor must be done at an annual meeting where the majority of the shareholders vote in a new auditor in compliance with section 196 of the Companies Act 1993
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