"ASSIGNMENT" 4
Literature Review
According to Kassem & Higson (2016), states how the principles involving auditor
independence are dictated solely through “ISA 200” framework. This reduces the undiluted
verdicts from external auditors leading to corrupt practices in a corporation. This “ISA” does not
undertake the problems identified by the auditors and recognized from a legislative perspective.
This makes the external auditors wary regarding the factual analysis of financial statements. It
increases their capacity to mistrust functions leading in figures about fixed assets after
depreciation. That reflects heavily upon the financial markets as investors less reliant on
distributing its capital to companies, with negligible auditor independence. This is largely due to
the fact of collusion between owners and auditors that reduces fair representation into the same.
According to Wu et al. (2016), Certain enterprises follow principles into supervising financial
decisions after its failure. This is due to “ISA 200” limiting the scope of the audit through the
policy of reasonable assurance. The auditors become circumspect in their approach and this
limits the opportunity for companies to take care of risks. That is especially why the managerial
heads find it beneficial to consult third party options in the form of external auditors. The
recently held “7th annual audit forum” conducted by the “EU audit reform", tried to
reclassify the scope of auditors in the world. This gave flexible authority to the management who
under accounting governance need to perform financial analysis. This could reduce to
repercussions involved to some extent.

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Literature Review Assignment 2022

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