Summary of The Auditor

The Auditor, an instructional novella written by James K. Loebbecke, tells the story of Jack Butler, a man from the San Francisco Bay area, who goes to college, majors in accounting, and goes to work for a large accounting firm referred to as “The Firm.” The story is loosely based upon the real world experiences of the author, and is written to give students a look into the world of public accounting that goes beyond a textbook. The Auditor not only gives students a chance to follow Jack Butler’s journey up the company ladder at The Firm, but also reiterates the relative importance of conventional lessons learned in school.

The goal in the life of a college student is graduating and getting the dream job in the career field that is chosen. To achieve this goal takes more than just having the knowledge and heart for the career; it also takes technical skills to be able to perform the tasks. The Auditor: An Instructional Novella stretches beyond the standard textbooks to reveal the principles and practices of auditing as they are in the real world. The book consists of a few key aspects such as: targets students’ natural curiosity about the field of accounting, supports traditional teaching tools, shapes the potential challenges that awaits public accountants.

Chapter five marks the beginning of Jack’s career at The Firm. It is on this day that he is introduced to the “Bearisms.” Bearisms were a list of unwritten rules and sayings The Bear, Quentin Barnes, had compiled over his years with The Firm. Two weeks later, Jack was headed to a national training center for The Firm. Upon returning from his training trip, Jack sets out on his first audit engagement to the Bakersfield Cement Plant. On his first engagement, Jack discovers two problems. First, he finds out that a clerk had “borrowed” money out of the petty cash box, and that the money is missing. Second, he discovers that another employee has been adjusting inventory numbers. This first audit experience serves as a great learning experience for students because it gives them an idea of what could happen on your first audit. Jack showed that although it was his first audit, he was going to make sure he did the right thing to address both issues. To conclude the chapter, Jack states that he left Bakersfield feeling that he “had not only learned a lot, but had done a good job as well.” This story helps the student to understand the full process of an audit and know what to do if problems are discovered. The chapter as a whole displays to the student how a new hire goes through the training process and then begins on their first audit. This allows the student to form an idea of what to expect when they begin their careers at their respective firms.

The Model of Trust Enhancement was established to enhance and maintain the public’s trust in the accounting profession. Over the last two decades, the ethics of the accounting profession has been questioned and public trust destabilized, in particular for auditors, due to the Enron debacle. The fact that an auditing firm would assist their clients with publishing an inadequate set of financial statements shows their willingness to violate laws and regulations (Sims & Brinkmann, 2003). According to the textbook, “Because trust is essential, even the appearance of an accountant’s honesty and integrity is important. The auditor, therefore, must not only be trustworthy, but he or she must also appear trustworthy” (Duska, Duska & Ragatz, 2011, p. 116). The majority of statements filed inadequately have a substantial impact on the credibility of the accounting profession as a whole. Sullivan (n.d.10) states that a CPA must possess a high level of trust, by applying professional judgment and enhancing the three trustworthy characteristics (ability, benevolence, and integrity) when resolving accounting ethics dilemmas (slide 3).

LCC has conducted an audit of Apollo Shoes, Inc. balance sheets, the retained earnings, cash flows, and other related statements of income for the year ended December 31, 2006/2007. Apollo Shoes Inc management is responsible for maintaining the effective internal controls that goes along with the financial statements and how well the accuracy is going to be. LLC has evaluated the effectiveness of the said controls and with everything to see the relevance in the timing, the substantive in quality, and the comprehensive in nature. The responsibility of our firm is to express an opinion that is supported by audit evidence in

Within the accounting profession, “grey areas” are created through the vague definitions between legal and illegal. Often difficulties arise when there are such pressures to meet expectations that it comes down to “individual interpretation” (Soltes, 2011). Richards’ belief that the vulnerability of a company can derive from subjective decision-making in these “gray areas” exposes a void in which managers should be monitoring more closely.

One great problem that has been realized to have entered into the accounting industry is that a lot of accounting firms only give help to their clients whenever they feel so. Unfortunately, this has far much bigger negative results to businesses. A lot of the businesses go through a stressful experience and sometimes it is adverse. We have a great understanding that our clients choose us because of our great effort to ensure that we help them most when in need.

Based on Client Confidentiality and Fraud the limited nature of review assumptions, together with the American Institute of Certified Public Accountants' (AICPA) customer confidentiality guideline, puts the reviewer in the position of needing to pick between procuring a job or settling on a fitting moral decision. Expert codes for U.s. bookkeeping morals are more prohibitive than those of most expert affiliations, even those for which the customer specialist benefit is decently perceived. Also, the idea of bookkeeper customer benefit has never been underpinned by the government courts including various U.s. Incomparable Court choices, which neglected to discover such a privilege. Changes in expert norms in regards to confidentiality are important

This research paper analyzes the degree of an auditor's liability to clients and third parties under applicable law.

It is important because the use of the budget spreadsheet as a tool relies on the fact that data is accurate.

It highlights the importance of auditors applying sensitive and ethical judgments in all their engagements. Members have the responsibility to collaborate with each other to improve the art of accounting, as well as to maintain the public’s confidence. The auditor’s responsibilities are essential to an effective audit process because through planning, auditors should to communicate with each other, be very organized and discuss what and how to do things in order to serve the public. One of the most important parts in auditing is planning, for that reason responsibility is a must.

When analyzing the Pinnacle Manufacturing Financial Statements there multiple concerns that should be further investigated that I will explain in this memo. When identifying the year to year change and using financial ratios found on A6, there are a couple of concerns that need to be identified. The fact that the operating expense from fluctuated from an increase $892,861 from 2009 to 2010 and then decreased by $956,231 from 2010 to 2011 should be raised in question. At the same time Operating expenses income from operations decreased from 2009-2010 by $1,260,571 and increased from 2010-2011 by $78,541. The -23.10% from 2009-2010 is concerning in their ability realized from profit on their business operation. On the balance sheet there

An auditor’s role in an audit is very important. An auditor must be able to collect enough evidence to supports their finding, and also be on the lookout for fraud. Company’s may or may not know the law, but it is the job to know the law, and be able to educate and report findings properly. Since the Sarbanes-Oxley Act, there have been provisions that have directly affected auditors. This paper will include the details of the Sarbanes-Oxley Act, how ethics and independence have affected auditors, as well implementation of new standards based on the Sarbanes-Oxley Act.

In this scenario, Hamilton Wong and his peer Lauren Hutchinson, employees at Sun and Berardo, were two of the independent auditors assigned to the Willie & Lomax engagement. One of Wong’s responsibilities was to hand in the time reported weekly to the senior auditor in charge. During this time, Wong became aware of Hutchinson underreporting her time for the client when he noticed incomplete files the night before and in the morning, the files and memos were complete.

The chief executive of the company was closely working with the vendors whose confirmations were vital in the auditing work and hence they could have submitted false confirmations. The auditing firm established a national risk management program for its clients and so national reviews were done to identify the high risk items in the financial statement. The vendor allowances were particularly high but they were not documented. As such, the auditors were supposed to demand for the documentations and compare them with the real figures. It is however noted that most of the documentations received were non-standard and this could have led to a different audit report given that vendor allowances were earlier identified as a high risk area. Inventory management was found to be poor especially in the allowances for inventory reserves. The audit firm was therefore obliged to carry out a thorough evaluation of the inventory reserves and determine whether it was reasonable. The valuation was also supposed to include all classes of inventory but for the case of the company, the evaluation excluded instances where no sales had been made. Hence, this evaluation could not accurately represent the position of the inventory reserve in the company. (Waters,2003)