Example Of Auditor Competence

CAS 300 requires auditors to their audit using a risk based model where the nature, timing and extent of audit procedures are based on the assessed risk of material misstatement. Pickett (2006) argues that for audits to be effective and efficient, much of the audit effort should be focused on areas that are considered to pose the highest audit risk. Additional audit procedures should be linked to individual audit assertions whereas other audit procedures need to be performed as and when needed. Thus, for an audit plan to be put in place, it is necessary for an auditor to come up with a risk profile of the client comprising an understanding of the business operating by the audit client, assess business risk and also perform its preliminary analytical review.

a. Describe the purpose of analytical procedures performed in the planning stage of the audit.

Under audit planning, the auditor decides whether to accept a new client or continue serving an existing one. This determination is

In accordance with ASA 315.11 understanding the entity and its environment is a critical area that auditor should gain in the process of planning. The knowledge gain by the auditor helps the auditor to recognise the transactions as well as activities within the entity. Furthermore, it assists the auditor to understand the risk areas which can create a significant effect on the financial report and it also clarifies the appropriateness and reasonableness of accounting policies, estimates and assumptions used within the entity. Gay and Simnett (2015, p.265 ) defines that according to ASA 315.11 “the auditor’s knowledge should consist of consideration of factors such as its ownership, organizational structure, governance structures, objectives

The required capabilities for audit managers and directors often focused on leadership and management skills, technical expertise, advanced audit skills, achievement orientation, ability to develop and coach others, high level communication skills, and ability to make strategic decisions (Ibid).

The ?Sarbanes-Oxley Act of 2002? was enacted by the Senate and House of Representatives of the United States of America in Congress assembled on January 23, 2002. The act aims to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws. The act has made amendments to some sections of the Securities Exchange Act of 1934 and arranged them in sections over eleven titles. Title II has nine sections that regulate independence of auditors of registered public accounting firms.

When assessing an internal auditor’s competence, an auditor ordinarily obtains information about all of the following except

The auditor required to providing a reasonable assurance about the financial statements that they are free of error or fraud by planning and performing audit work in conformity with GAAS (AU-C 240). According to AU-C 240, fraudulent financial reporting and misappropriation of assets are the two main category of fraud. The auditor should consider the incentive or pressure upon the employee, evaluating the environment or the opportunities to commit the fraud and looking at the justifications to committing fraud when he assessing a likelihood of fraud (AU-C 240). However, in the case they were incentive and pressure by management to meet the Wall Street expectations, opportunities to acquire companies in the future, and weakness of the internal control.

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.

| The first general standard requires that the audit be performed by individuals with adequate technical training and proficiency as an auditor. The auditor must have obtained a proper education in accounting and auditing and then increase his/her knowledge and proficiency through experience.

Before commencing an audit, the new auditor would determine the extent and scope of activities involved in the planning process. This would depend on the complexity and size of the organization (CVS), how much experience the auditor has with the company, and any new events that may occur causing changes to the audit. During audit planning and strategy making, the new auditor should assess if the issues below are crucial to internal control and financial reports of the company being audited. If they are, the auditor should indicate their effect on the audit

The auditing profession by nature entails a person to be as trustworthy as they can possibly be since the need to be free from “undue influence” is not only expected but should exceed all expectations. The need for an auditor to have a clear mind, free from all distractions, can be compared to a surgeon attempting to perform a high-risk surgery where his actions would ultimately determine whether the person undergoing the surgery lives or dies. Saving lives is a universal principal and almost everyone acts upon it and so we have more lives saved than lost. Similarly stakeholders’ trust that auditors will act with integrity and honesty, which will enable them to see beyond the greed of money, therefore, act in the appropriate manner that will sustain the livelihood of the stakeholders. Relating to the importance of honesty, the authors highlighted Immanuel Kant theory, ‘Kant’s first categorical imperative, the universalizability principle: ‘act so you can will the maxim of your actions to be a universal law.’ Which supports the notion that it is also in the best interest for auditors to be ethical and trustworthy in order to sustain the functions of auditing. For example, if every auditor was to engage in dishonesty and unethical practices, they run a high risk of undermining the confidence and trust that stakeholders have placed on them. Without this public trust, the whole institution of

The main strategy of completing the audit is to obtain an understanding of the client’s financial statements, operating processes, and governance policies. The auditor must adopt a blueprint to determine the external factors that could adversely affect the company’s operations. The auditor needs to evaluate regulatory practice and ongoing litigation events. With these strategies in place, the audit should be easily streamlined to stay on track and completed in the designated timeframe.

Auditing is 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). Auditing should be done by a competent, independent person. Accounting is the recording, classifying, and summarizing of economic events in a logical manner for the purpose of providing financial information for decision making (Arens, Elder, & Beasley, 2010). Many people confuse auditing with accounting because auditing is usually concerned with accounting information, and many auditors have a considerable amount of experience in the accounting profession. This confusion results from the certified public accountant title given to

Methods are an important part of a company to help maintain the proper documentation. Such methods can be used in society PIFCO ZEN CHEN. This leads to eliminate missed deeds of all financial documents of the company or the head of the company, as Director such methods in the company. The director of the company also has management of all a law firm. Director should all actions taken into account by all employees. Such actions are any of the financial or accounting records. The auditor checks for each manipulation in numbers or accounts. So you must have in mind, what are the accounts clear and all the information is correct.