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Auditing Theory and Practice | Report

Added on - 16 May 2020

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Running head: AUDITING THEORY AND PRACTICEAuditing theory and practiceName of the Student:Name of the University:Author Note
1AUDITING THEORY AND PRACTICETable of ContentsIntroduction......................................................................................................................................2Literature Review............................................................................................................................2Analysis of potential threats to independence and objectivity:.......................................................2Conclusion:......................................................................................................................................2References list:.................................................................................................................................2
2AUDITING THEORY AND PRACTICEIntroduction:The report is prepared to critically evaluate the independence and objectivity of auditorson quality of audit. An in depth review of the current issues pertaining to IS 200 concerningindependence and professional skepticism of auditors have been demonstrated in the study. Thefactors influencing the quality of audit are critically appraised by discussing the benefits ofengagement quality control review implementation. The professional skepticism prevailing in theauditing industry by critically analyzing the current threats to independence is also explained inthe report. Professional skepticism is likely to be applied by auditors at various points andvarious stages from the acceptance of clients during the auditing process. It is required byauditors to apply such skepticism when they are forming auditing opinion (Abbottet al.2016).The given case study is about discovery of accounting regularities of British Telecom that wasnot discovered by Pwc. Such accounting irregularities have led to threatening of independence ofauditors.Literature Review:The international standard of auditing (ISA 200) outline the requirement for applying theconcept of professional skepticism that would help in recognition of circumstances that mayexist and causing material misstatement of the financial statements. Such skepticism is related tothe team of audit for critically analyzing and obtaining information from the client and thirdparties. Independence of auditors is regarded as one of the ethical requirement relating tofinancial statement auditing. It is required by auditors to comply with ethics such as exercisingindependence when auditing the statements. Independence of auditors is regarded as fundamentalprecursor and the meaning of professional skepticism is appreciated by independence of auditors(Byrneset al. 2018).Since there are many diversified factors influencing audit quality, it is not easy to giveany particular definition of audit quality. However, audit quality is defined as a joint probabilitythat is assessed by market that auditor will be able to detect material misstatement in thefinancial statement that is related with technical capabilities and accordingly reporting the errorsthat is related to auditors independence. In other words, it can be said that audit quality is the
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