How to Write a Summary of an Article? It is an attitude of mind characterized by integrity and an objective approach to professional works. A professional auditor should work both independent and seen to be so.
The purpose of an audit to enhance the credibility of a financial enhancements by providing reasonable assurance from an independent source that present a true and fair view in accordance with an accounting standard.
In addition to the technical competence, auditor independence is the most important factor in establishing the credibility of an audit opinion. In doing this, they provide comfort to external users of these statements that what they are reading has been prepared in accordance with all the accounting and other mandatory and professional requirements.
The onus of being able to read and interpret the information contained in the financial statements rests with the users, and no interpretation of the information is required by the auditors.
The role of the external auditor in the supervisory process requires standards such as independence, objectivity and integrity to achieve. Even though the regulator and the external auditor perform similar functions, namely the verification of financial statements, they serve particular interests.
The regulator works towards safeguarding financial stability and investor interests. On the other hand, external auditor serves the private interests of the shareholders of a company.
The financial audit remains an important aspect of the corporate governance that makes management accountable to shareholders for its stewardship of a company.
External auditor may however, have a commercial interest too. The debate surrounding the role of external auditors focuses particular on auditor independence. As a result, some audit firms have commercial interest to protect too.
The new directive states that all firms listed on the stock market must have an independent audit committee which will recommend an auditor for shareholder approval. It also states that auditors or audit partners must be rotated but does not mention the separation of auditors from consultancy work despite protests that there is a link to compromising the independence of auditors.
However this may be because Brussels also shares the view that there is no evidence confirming the correlation between the levels of non-audit fees and audit failures and that as a result, sufficient safeguards are in place.
Auditors must be free to approach a piece of work in whatever manner they consider best. In addition, the auditing profession is a dynamic one, with new techniques which is constantly being developed and upgraded which the auditor may decide to use. The strategy methods which the auditors intend to implement cannot be inhibited in any way.
Basically, auditors must have unlimited access to all company information. Any queries regarding a company business and accounting treatment must be answered by the company.
The collection of audit evidence is an essential process, and cannot be restricted in any way by Client Company. If company directors have been misleading shareholders by falsifying accounting information, they will strive to prevent the auditors from reporting this.
It is the situations when auditor independence is most likely to be compromised. No audit firm wants to have to explain to the press about the loss of a big client. This gives the directors of the large company a commanding position over its audit firm and they may look to take advantage of it in anyway.
The audit team would feel pressurized to satisfy the needs of the directors and in doing so they would lose their independence. There are two important aspects to independence which must be distinguished from each other: Together, both forms are essential to achieve the goals of independence.
Real independence refers to the actual independence of auditor, also known as independence of mind. That is why perceived independence is of such importance. It is essential that the auditor not only acts as independently, but appears independent too.
If an auditor is in fact independent, but one or more factors suggest otherwise, this could potentially lead to the public concluding that the audit report does not represent a true and a fair view. Independence in appearances also reduces the opportunity for an auditor to act otherwise than independently, which subsequently adds credibility to the audit report.An auditor must not only appear to be independent, but must also be independent in fact.
Research the concept of “auditor’s independence” using your online library resources, and the Internet. The Need For Auditors Independence Accounting Essay.
The issue of auditor independence is a crucial element and very important for the audit profession. This concept has been discussed widely and many definitions have been presented in literature.
The issue of auditor independence is a crucial element and very important for the audit profession. This concept has been discussed widely and many definitions have been presented in literature. The Importance of External Auditor’s Independence Essay.
According to Gillespie, Lewis and Hamilton () an audit is: “a scrutiny of the accounts by a qualified auditor who carries out checks on the figures so as to establish whether the accounts show a true and fair view of the results and the financial position of the entity - The Importance of External Auditor’s Independence.
Introduction Independence is a fundamental to the reliability of auditors’ reports. It is an attitude of mind characterized by integrity and an objective approach to professional works.
Independence of external auditor By: shubham kanchhal Auditor independence refers to the independence of the auditor from parties that may have a financial interest in business being audited.
Independence requires integrity and an objective approach for the audit process.