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auditing Essay

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Auditing Theory and Practice
Case 1
WorldCom: A Focus on Professional Responsibility

Prepared by: EL Ahmadi Med Reda
Worked With: Ibtihal Slassi

Fall 2013

1- Auditor independence refers to the disinterest from the internal and external parties that could influence the professional judgment of an auditor. In other words, auditor independence is the lack of any interest that may create a threat or a risk of material bias regarding the reliability of the financial statement. Furthermore, the main aim of auditor independence is to improve the consistency and the reliability of information that might be used in decisions making. Another role of the auditor independence is to enhance the cost-effectiveness of …show more content…

Andersen provided the WorldCom company with different services in addition to audit’s profession like consulting, litigation support, and tax services. The last element is that Andersen had a mutual interest: Andersen was well paid the WorldCom Company and was considered as “the 20most important engagement”. He was also “the largest client of its Mississippi office for 3 years”.
However, Andersen was showing his independence in fact more than his independence in appearance. He was not a partner of the WorldCom Company even he had experienced a long-term partnership.

3- Referring to paragraph 36 of PCAOB Auditing Standard N°.2,.auditors are required to be independent and to exercise professional skepticism.
Due to the limited access to the information, Andersen did not exercise the professional Skepticism, which is an essential element of the principles of the due professional care. WorldCom Company limited his access to information by allowing him to rely on the printed ledgers rather than the computerized General Ledger. His demand for asking and meeting some employees was not permitted. Indeed, he was not able to collect evidence for the different misstatements made by the company because of the scope limitation. Moreover,

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