The Importance Of A Independent Audit Is Stronger Than It Ever Has Been Essay

PCAOB describes professional skepticism as a general duty of care that needs to be applied by the auditor throughout the duration of the audit engagement. Professional skepticism involves the auditor having a clear and questioning mind regarding the assertions that are presented by management or other client personnel. The auditor is instructed to not take the words or data presented by management as sufficient and appropriate audit evidence but rather the auditor needs to thoroughly audit the evidence with a questioning mind to achieve reasonable assurance about the persuasiveness of the evidence. Skepticism is composed of three elements; auditor attributes, mindset and actions. The PCAOB

Auditor Independence contains 9 parts which stablish standards for external auditor independence, so it will have limit conflicts of interest, also contains that an approval requirements for new auditor, audit partner rotation, and auditor reporting requirements. Also restrict auditing organization from providing non audit services for the same clients they audit.

ABSTRACT: The purpose of this teaching case is to expand students’ understanding of the concepts of professional skepticism and independence. The case is based on an actual incident and illustrates the exercise of professional skepticism by a staff auditor who finds himself in the uncomfortable situation of accusing a friend of fraud. The case demonstrates the difficult personal and professional choices that auditors must sometimes make. In analyzing the case, students consider auditor independence rules, as well as the concepts of

Independent audit in turn makes the financial statements more credible and reliable source of information

Summary: The objective of this article is to clarify the significance of professional skepticism as an essential part of the auditor’s mindset, and to consider the reasons why approaching an audit with an attitude of professional skepticism is becoming increasingly important. The following are three case studies that will concentrate your consideration on what it takes to be a skeptical auditor when performing journal entry testing.

a first-time in-charge to have a client contact that can help you avoid blowing the budget.

I was first introduced to the world of business through a book called Pipe Dreams: Greed, Ego, and the Death of Enron. At the time, though I had difficulty understanding all the complicated underlying causes for the energy giant’s collapse, I was struck by the fact that Arthur Andersen, Enron’s auditor, failed to fulfill their obligations to conduct proper audits, and ultimately lost their CPA licenses. This made me interested in the role of auditors and the reasons behind their significant—though not always positive—influence. It also motivated me to learn accountancy at the University of Hong Kong upon graduating from high school.

External audits represented 3.3 percent of fraud detection sources, which is a significant divergence from the public expectation of auditors. The public does not necessarily understand that auditors are supposed to plan audits to address the risk of fraud and perform procedures accordingly, not actively investigate it through the audit] (Stavros, 2012).

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.

3 pillars of effective internal audit services- independence and objectivitiy, proficiency, and due professional care.

2001. It was the year that every individual; man, woman and children on Earth would remember. There was the September 11 event which was considered the worst terrorist attack that has happened in U.S. history, killing a total of 2, 977 people. And not long after that, in the business world, on December 2, the greatest corporate failure was exposed. The crash of Enron in US, followed by the worldwide collapse of its auditor, Arthur Andersen became one the most popular accounting scandal where it is still being talked about even after a decade has passed. Following this scandal, other massive organizations like WorldCom (2002), AIG (2004), and Satyam Computer Services (2009) shared the same fate. Since then, there have been questions being

Professional skepticism practices as neutral but discipline approach to detection and investigation. Per SAS No. 1 it suggests that an auditor neither assumers that management is dishonest or assumes unquestionable honesty. Professional skepticism requires fraud examiners to “pull on thread” in which means Red flags are warning signal or something that demands attention or provokes an irate reaction. Red Flag symptoms of fraud may be divided into at least six categories: unexplained accounting anomalies, exploited internal control weaknesses, identified analytical anomalies where non

However, the AU-C 230 and AS3, indicate that the auditors, must prepare audit documentation to understand the work performed. So, it enforces the opinion of the financial statement. The AU-C 230 Experienced means that the auditor has skills and can do the audit. Besides the testimony, Ms. Stitt testimony went with the AU- C 230 because she required the documentation record and reviewed it to provide a sufficient a clear understanding of working performed. Also, Audit documentation aims the engagement committee to release the review responsibilities According to the AU-C 200 professional skepticism; means that the auditor has to questions in his mind, and it depends on from auditor to another. So, the auditor considers the fraud. However, this case relevant to the AU-C 300 and AS 10 because the engagement team is involved in the audit. At the end, the responsibility for professional skepticism differs from an auditor to another because of the auditor’s consideration among the engagement team PCAOB No10. However, there are many obstacles to applying the skepticism professional. For instance, the work pressure can result in reduction of the professional

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 includes the indirect ability of management to influence the career prospects of internal auditors, as well as the budget and planning of the internal audit function. This is exacerbated by internal auditors themselves using the function as a stepping stone to advance their career objectives. It also can be argued that the independence theory may be lost in such a culture, especially if it is combined with people within the organization perceiving internal auditors as partners, thereby subjecting the internal audit function to pressures threatening its independence, rather than recognizing the internal audit function as an independent assurance function("A Critical Analysis Of The Independence Of The Internal Audit Function: Evidence From Australia: Accounting, Auditing & Accountability Journal: Vol 22, No