Governance of external auditors
Role of auditor
In an effort to transform MSEL into a listed company, we should be able to ensure that the shareholders’ interests are protected. In the past, 85% of shares were owned by the directors, and they were highly motivated to work for the profitability of MSEL as the share was directly correlated with their remuneration. However, after joining the London Stock Exchange, the directors’ proportion of shares will inevitably decrease as a result of issuing new shares.
It is not uncommon that human are self-interest, as the agents (managers) of MSEL, shareholders will be afraid that the information provided by us tends to be inadequate, making them suffer unnecessary risks. To deal with this problem, auditors have been introduced. By making contracts with the business, auditors act as the “supervisory body” and provide detailed report to the shareholders. In a way, auditors prevent the business from manipulating and cheating the shareholders, and then protect the public interest.
Issue of contract with Adams & Co
Although we know that Adams & Co, our auditor, has given a ‘clean audit opinion’, there still remains some serious problems with reference to the corporate governance aspect. The senior partner of auditors, Bill, was at the same university with Jack Bradford, our business establisher. The public may worry that governance of MSEL will be insufficient, because Adams & Co can be in a position to shield MSEL for own interest.
To
The purpose of this paper is to discuss the SEC’s influence on auditing a private company and the essential activities involved in the initial planning of an audit. Next the discussion will delve into four stages of the audit and tasks performed by the auditors as well as internal control findings and various aspects of the audit.
An important decision for any shareholder is deciding whether or not to do business with that company. When a business is audited, the operations are reviewed to make sure that nothing is being hidden. An auditor will review the company’s financial statement and practices to confirm that each are direct and correct. The financial statements are the business’s way of representing them and showing that they are following the Generally Accepted Accounting Principles. The audit process is an important one because it provides a platform for the auditor’s opinion concerning the financial statements of the company. As part of the audit process the auditor will conduct an audit plan that outlines a number of actions that he or she will be perform while also detailing the reason for those actions. With every audit, the business’s management is in charge of handing over the financial statements that the auditor will review; while the auditor will review the statements for any material or immaterial misstatements.
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.
The Sarbanes Oxley Act of 2002 marked a significant change in the world of business with relation to auditors and public companies. In this paper, I will discuss the causes that led to the creation of the Sarbanes Oxley Act as well as key sections of the act that impact auditors and their effect on public companies and investors. I will also address the impact of the auditing standard no. 5 and how it pertain to auditors and public accounting firms.
The breakdown of Dick Smith Electronics has aroused wide concerns in Australia since it brought losses to the related parties at different levels. This essay focuses on analyzing how the company could have possibly avoided the failure if it had applied the third edition of ASX Corporate Governance Principles more effectively.
Company’s new CAE can explain to the non-audit employees that IAD’s objective is to add values and help improve the business processes as well as company performance, which will affect each employee significantly. It is important to let all employees understand that the answers or thoughts they provide to the internal auditors will not be used against them. Moreover, establishing good relationship and providing ongoing communication with the non-audit employees can make them feel more comfortable to share their feedback and thoughts, and can reduce the “us vs. them” relationship between company’s non-audit employees and the staff of internal auditors.
This frequently puts the auditor in the position, in effect, of deciding whether a company is able to obtain the funds it needs to continue operating. Thus, the auditor’s qualification tends to be a self-fulfilling prophecy. The auditor’s expression of uncertainty about the company’s ability to continue may contribute to making it a certainty.
The corporate governance debate has been a global phenomenon, attributed to the increasing deregulation of worldwide capital markets and the expansion of the shareholder class . Such changes have increased awareness of the importance of corporate governance practices,
According to ICAEW, auditor independence mainly refers to the independence of the external auditor from parties that have an interest in the financial statements of the business being audited. It requires having both integrity and an objective manner to the auditing process. In order for the concept to be deemed effective the auditor needs to carry out their work freely. One of the main purposes of auditing is to increase credibility of the entity’s’ financial statements, as they have expressed their own professional opinion on the truth and fair view in accordance with the proper accounting standards used. This is only possible if the audit is made with reasonable assurance that it has come from an independent source and has not been influenced by other parties, such as managers, directors or by conflict of interest.
The presence of an external auditor allows creditors, investors or bankers to use financial statements that have been prepared with confidence. Although it does not guarantee the accuracy of a financial statement, it provides users with some reassurance that a company’s financial statements give a true and fair view of its financial position and its business operations. It also provides credibility, where in business, is a major asset. With credibility, the willingness of investors, bankers and others to relate and undertake business projects with a company increases. Credibility is also important to build positive reputations.
An important function of the accounting field is to provide external users of financial statements with assurance that the financial information being presented is both reliable and accurate. This basic function of accounting is so important that there is an entire field of experts, called auditors, dedicated to assuring its proper performance. Throughout history there have been many instances in which the basic equilibrium between an institution and current/potential investor has been threatened due to a lack of accountability and trust between the two parties. This issue has been the catalyst for many discussions regarding the proper procedures a firm should follow in order to provide
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.
The aim of this essay is to study the function of external auditors in order to analyze why it is important to be independent. The primary mission of external auditors is to review and evaluate all the financial records of a company or corporation. They provide an objective opinion on the organization’s financial statement and effectiveness of the accounting polices in order to help management to make decisions. If the independence of the external auditors is impaired, the public will doubt the quality of professional auditing services, and the consequence would be very serious, just like the bankruptcy of Enron led to the disorganization of Arthur Andersen, once a giant accounting company in the world. In order to maintain and increase
This paper critically analyses the independence of the internal audit function through its relationship with management and the audit committee. Given the growing role of internal auditing in contemporary corporate governance and independence has gained renewed attention.
A company prepares financial statement to provide information about its financial position and performance. This information is in turn used by a wide range of stakeholders (such as investors, banks, customers, suppliers etc) in making economic decisions with respect to respective economic interest in the company. Typically, in terms of ownership by investment in shares of the company, shareholders though own the company but do not manage it. Therefore, the shareholder and other such stakeholders to get comfort in taking sound decision need independent assurance from the auditors that the financial statements reflect true and fair view of the company affairs in all material respects. Hence, in order to enhance the level of