Internal Audit Independence and Objectivity
Added on 2020-05-28
23 Pages5528 Words110 Views
|
|
|
INDEPENDENCE OF AUDITORS 1Factors Influencing the Independence of AuditorsName:Institution:Course:Tutor:Date:
INDEPENDENCE OF AUDITORS 2Executive Summary There have been increasing discussions on the role of auditing firms to determine the financial audit statement of most of the firms. The growing scandals in government and business organizations that require auditing always need up to without substantive proof of the use of financial capital as a result of interferences of the auditors proves. Independence of auditors is the primary justification of the effectiveness of the profession. The high quality of financial analysis enhances the reputation of a firm, and that can only be achieved without any interference to the objectivity of the auditors. The paper is a proposal that explores the reasons that have influenced the independence of auditors, through research that will be carried out by a multinational auditing firm. The information gained will be analyzed to help in understanding thefactors, to provide the recommendation that will also be used in future auditing process to maintain independence.Table of Contents
INDEPENDENCE OF AUDITORS 3Introduction.................................................................................................................................................5Research Problem....................................................................................................................................6Research questions..................................................................................................................................7Research Objectives and Aims.................................................................................................................7Justification of the research....................................................................................................................7Literature Review........................................................................................................................................8Introduction.............................................................................................................................................8Models and Dimensions..........................................................................................................................9Auditor’ Independence..........................................................................................................................10Importance of Auditor’s independence.................................................................................................10Factors influencing the independence of Auditors................................................................................11Size of the Audit Fees........................................................................................................................11The Size of the Audit Firm..................................................................................................................12The Level of Competition on the Audit service Firms........................................................................12Audit Firm Tenure..............................................................................................................................13The Audit Committees.......................................................................................................................13Safeguards to Independence.................................................................................................................14Summary of the literature review.........................................................................................................14Research and Methodology.......................................................................................................................14The Research Design..............................................................................................................................15Target Population..................................................................................................................................15Sample Size and Sampling Procedure....................................................................................................15Data Collection Instruments..................................................................................................................16Validity and Reliability of the Data Collection Instrument.....................................................................17The validity of the device...................................................................................................................17Reliability of the instrument..............................................................................................................17Data Collection Procedure.....................................................................................................................18Data analysis......................................................................................................................................18Ethical Issues.........................................................................................................................................19List of References......................................................................................................................................20
INDEPENDENCE OF AUDITORS 4
INDEPENDENCE OF AUDITORS 5IntroductionThe first chapter provides the background information about the research problem, the statement of the issues, the aim and objectives of the study, the research questions used in developing the review and justification of the study.The rise of scandals in various business organizations called for the need of audition to determine the usage of multiple funds in the business as to gain the trust of the stakeholders. The process always carried about by either internal or external financial expertise of recently have attracted by debates over independence since a good number of the audition process have been under various influence such as from the management(Bebchuk & Hamdani 2017,p.1298). Auditor independent is essential during the process to ensure that the quality of work is of utmostfaith, the user's financial report tend to be true. However, several instances have been reported of the wrong descriptions given as a result of interference. These instances of false user financial reports made by either internal or external auditors since 2000 have sparked questions and opinions over the effectiveness and independence of the auditors. The effectiveness of auditors is majorly determined by how many degrees can they operate without the work being influenced by any factor to give a predetermined financial report, an aspect that is not common with many financial auditors. According to the requirement and code of ethics, European Union’s Eighth Edition and the international federation of Accountants, every organization, should observe all rules and regulations to facilitate the objectivity of the auditing process. Therefore, maximum independence is required for proper judgment and
INDEPENDENCE OF AUDITORS 6production of an accurate financial report of the user irrespective of the status, relationship or any other factor.The independence of the auditor dictate the ability to honestly and impartially provide an accurate financial report of the user, and this is very instrumental in every business as it renders reliability of the audition report, restoring the trust of stakeholders and even promote more financial investment in the company. As stated above, the independence of the auditors take place both internally and externally: where the internal happenings result from the stakeholders who are directly related to the business under financial investigation. The domestic issues entail inadequate internal controls, weak and insufficient risk management. On the other hand, the external independence refers to individuals that have external interest from the audit results such as the audit committee and the public standards of accounting. The recent global debates on the financial audits reports of various multinational organizations have proven that most of the audit firms do not stand by their code of conduct as they get tossed by theresource owners to provide a biased report.Research ProblemThe primary task of the auditing is to provide a valid user ’s financial report that can be used by anybody determine the financial objectivity of any organization and can be used as clean bill of health. A clean bill of health is critical in attracting more investment and regaining trust among the stakeholders. However, in most cases, auditors fail to fulfill their primary role of providing an unbiased report as a result of some factors that might be originating within the organization oroutside the organization. The influence financial report tends to break down the reputation of the auditor and the firms, hence places most of the auditors under investigation to determine reasons
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Importance of Ethics in Auditing and Accountinglg...
|16
|6062
|264
Integrated Accounting Projects | Reportlg...
|15
|5078
|11
Auditor’s Rotation and its Impact on Auditor's Performancelg...
|24
|6288
|457
Business Research Proposallg...
|4
|432
|759
Accountants and Auditors Responsibilities and Contributions towards Corporate Governancelg...
|21
|5908
|383
The Positive Impact of Forensic Accounting, Auditing and Investigation on Corporate Governance in the Financial Sector of Trinidad and Tobagolg...
|89
|17301
|160