The Importance Of Developing Fluency With Qualitative Research Method

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.

This research paper is being submitted on March 10, 2013, for Tiffany Krogman, A340/ACG3085 Section 03, Advanced Auditing Concepts & Standards.

In 2000 the panel on audit effectiveness made a variety of suggestions to improve audits including strengthening and unifying the rules and regulations of audits, pre approving non audit services, and assigning more responsibility to top level management for the

The importance of audit committees increased through the years and especially from pre-Sarbanes – Oxley to post-Sarbanes – Oxley. Although, what are the responsibilities of the audit committee members? How does a Chief Audit Executive (CAE) more effectively serve their audit committee members? How do auditors communicate with audit committees? What are the requirements for audit committees? Most of these questions are inherited from what the audit committee’s best practices are.

As a firm, we have an uncompromising dedication to quality and excellence in everything we undertake. We participate in the American Institute of Certified Public Accountants (AICPA) Peer Review Program, which covers our audit and accounting practices. This program requires our Firm undergo an examination of our quality control policies and procedures every three years by an independent public accounting firm. Because of our dedication to quality, we have selected a premier peer review firm for this evaluation and have received “pass without deficiency” (the highest achievable rating) on each of our examinations including the review completed earlier this year. See Appendix A for a copy of the most recent Peer Review Letter.

The Auditors’ responsibility for the detection of fraud is an ongoing issue that is surrounded by much controversy (Gray, Manson and Crawford, 2015). It is believed by many people that Auditors are responsible to detect fraud and have the ability to do something about it, while In fact they have a very limited role in the detection of fraud. The public’s misconception of the auditors roll and what the auditors roll actually is, is referred to as the expectation Gap. In the auditing profession they often have to keep up to date with the up to date standards from the International standards on auditing, these are important, as they are required to keep up with the constant evolving of the rules and what is expected of them. These standards are often referred to as ISA’s, the main focus of these will be ISA 240, this is the standard that covers fraud, and plays a large part in the way auditors do their statements. Throughout this essay we will be able to critically analyse what role the auditors play in the detection of fraud and what the public believe the auditors role is.

The audit will become a strong tool for feeding a continual improvement method and providing recognition for excellence in any organization. Eminent implementation of AN audit method needs managers to line positive expectations concerning however audits are going to be conducted, choose vital areas for audits, give positive communication concerning the aim of the audit findings, and involve individuals in following informed the audit findings. The audit ought to be seen as a way for distinctive each opportunities for improvement and areas of excellence that merit reward and recognition.

The paramount onus of an auditing professional is conveying reliable information to clients and the public so that they may make imperative, intellectual decisions. For this obligation to be fulfilled, a quality audit must be performed in accordance with generally accepted auditing standards (GAAS). Executing a quality audit necessitates an auditor reasonably assures financial statements are presented fairly in accordance with generally accepted accounting principles (GAAP) and not materially misstated, whether due to errors or fraud. Furthermore, executing a quality audit obliges an auditor to utilize professional skepticism by exercising proficient judgment and proves competency in accounting principles and professional auditing

In a free and open market, listed companies are required by law to provide their stakeholders with financial information that is credible. One method that can be used to obtain a trustworthy and objective financial reporting is through statutory auditing. However, the recent financial scandals and crisis have renewed concerns regarding the tenure of auditors and its impact on their audit quality and independence. Regulators and other experts have become concerned that the familiarity created between management and auditors over time and the need to retain client firms weakens the independence of auditors, and adversely affect the quality of their audit reports (Arel 2013: 16). On the other hand, those opposing mandatory audit firm rotation claim that the costs incurred as a result of frequently changing auditing firms surpasse its benefits by far (Beasley et al., 2009:67). Pozen (2012:11) points out that the chances of audit failures are greater during the early stages of an auditor-client relationship since the new auditor may not have auditor knowledge regarding operations, processes, and client-specific risks. The role of audit firm rotation as a means of sustaining the independence and reliability of financial reporting will be discussed in the paper as well as the views of stakeholders regarding the rotation rule and make recommendations on how to improve audit quality and independence will be considered.

Audit quality really suffers when auditor lack a sound base of experience and understanding concerning a public company’s business (AICPA, 2011).

Auditing standards in UK and Ireland, including Ethical Standards, International Standards on Auditing and International Standard on Quality Control, are enacted for audits of financial statements. The content of these standards includes objectives for the auditor, requirements and application and other explanatory material.

The way in which audit reports have been documented and presented has slightly changed since the 1940’s whereby the use of guidelines as provided by GAAS (Generally Accepted Auditing Standards) in the documentation and reporting of the report is still in use. The system used for reporting under GAAS within the United States is the pass/ fail model which analysts believe to be a very useful tool for concise and clear assessment of a fair reporting of the audited financial statements of a company. The new set of rules by the PCAOB sets out to seek the presentation of additional information regarding the process of audit pertaining to each business by rolling out new audit standards.

Statements prepared by company managers for their shareholders (Heang and Ali 2008). The general consensus achieved the primary objective of an audit function is to add credibility to the financial statement rather than on the detection of fraud and errors. This change in audit objective is evident in the successive edition of Montgomery’s Auditing text issued during this period which stated “An incidental, but nevertheless important, objective of an audit is detection of fraud.” (1934, p. 26). “Primary responsibility…for the control and discovery of irregularities necessarily lies with management.” (1940, p. 13). Hence, it can be witnessed that the shift of the focus of an audit function from preventing and detecting fraud and error towards assessing the truth and fairness of the companies’ financial statements began at this period (Heang and Ali 2008).

(2) The reasonableness gap, one of the more subjective components of the gap, is caused by society’s increasing and often unrealistic demands for accountability. This gap can be narrowed by improving and increasing public education so as to demonstrate to the public that existing professional standards and legislative requirements are adequate. Proactive approaches such as the implementation of auditing education has to be enforced in as my occasions as possible, from business meetings to shareholders’ meeting. The MacDonald Comission expressed their opinion that audit educations have been ineffective as it concluded that most of the public expectations were reasonable and achievable. Therefore in addition, auditors have to both accustom to society’s more reasonable demands and improve the manner in which they communicate their findings to financial statement users. The accounting

various proxies in an attempt to assess audit quality and, in turn, determine whether a differential in audit