Integrated Accounting Projects | Report

Running Head: INTEGRATED ACCOUNTING PROJECTS
INTEGRATED ACCOUNTING PROJECTS
Name of the Student
Name of the University
Author Note

1INTEGRATED ACCOUNTING PROJECTS
Table of Contents
1.Introduction.............................................................................................................................2
1.1 Background of the study..................................................................................................2
2. Research Problem...................................................................................................................4
2.1 Research Aims and Objective..............................................................................................5
2.2 Research Questions..............................................................................................................5
2.3 Practical Deployment within Industry.................................................................................5
2.4 Conceptual Framework........................................................................................................7
2.5 Hypothesis Formation..........................................................................................................8
3.Research Methodology............................................................................................................8
3.1 Research Design...............................................................................................................8
3.2 Kinds of Data used...............................................................................................................8
3.3 Data Collection Method...................................................................................................9
3.4 Sample and sample size.......................................................................................................9
3.5 Data Analysis Plan...............................................................................................................9
4. Limitations of Research.........................................................................................................9
5. Reference..............................................................................................................................11
6. Appendix:.............................................................................................................................13
Questionnaires for professionals:.............................................................................................13

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1.Introduction
The auditing is the term that refers to systematic and the independent examination of
the organizational books; documents, accounts and the vouchers for ascertaining how far the
financial statement presents fair and true view of the concern. The auditing processes by the
organizations, aimsto ensure better governance. The responsibility of the auditor is most
important, particularly in respect of shareholders and generally in respects of stakeholders
(Guiral et al. 2015). The auditors are required to keep this in mind that their requirements,
which are in accordance to the regulations, laws and public expectations are high. The
auditors ensure that the standards of the auditing have been complied. In case of any non-
compliance, the suggestions are provided by the auditors to management of the client, for
providing the necessary adjustments. In case of the management of the company, if they
unwilling for providing the adjustments then auditors issues the modified report of audit
(Narayan Roy, 2015).
However, for the decades, the professions of the auditing havesuffered with the series
of challenges. There are certain challenges, which arises from the internal sources and there
are other challenges, which arises from the external sources. The instance of the internal
challenges includes lack of the expertise, threat of the independence, staffing problems and
others. Further, the instance of the external challenges includes, pressures from the clients,
regulations, expectations gap and changes in the regulatory environment (Van Rinsum,
Maas&Stolker, 2018). There are various scandals in the past few years that have raised
numerous questions on the auditing professions. Some of the recent scandals suggest that
management of the audited entities has pressurized auditor to work in accordance with their
strategy and views (Dhaliwal et al. 2016). This means that the auditors or firm are not
accusedto lack of the negligence or the competencies rather they areaccused more
fundamentally on the deceit and disloyalty.As the result, auditors are criticized for their poor
audit work andpoor quality of the work.Hence, this research paper will be discussing
regarding various recent updates and challenges in the audit practice (Dattin, 2017).
1.1 Background of the study
Audit plays vital role in functioning of the capital markets. There is inelastic demand
of the audit practices by the business organizations. However, the financial scandals are
damaging the essence of the professions of the auditing. In the auditing profession, “the
heartbeat of the auditing profession” is considered as “the public trust”. In case, if this trust is

3INTEGRATED ACCOUNTING PROJECTS
betrayed then the professional financial also is destroyed. Auditors in the day-to-day
operations are faced by many challenges (Garcia-Blandon &Argiles, 2015). The auditor’s
independence implies the absence of the external pressures or the personal relationship,
which might comprises the integrity and objectivity of the auditors who are exerting their
concerned responsibilities (Tepalagul& Lin, 2015). The independence of the auditor
presupposes the existence of the personal and professional distance, which exists between the
clients and the auditor and the abilities for forming the judgments, which is biasedand
consists of the interest. There existnumerous factors, which influences the independence of
the auditor (Crockett & Ali, 2015). In the audit quality, independence is important
determinant.These factors include familiarity to the client, financial conditions of firms and
sizes of the clients relating to audit firm’s sizes. If the auditor is independent from the client
then the quality of the audit is perceived to be high (Husnin,Nawawi & PutehSalin, 2016). It
is because the independent auditor more likely reports on the discovered breach in the
financial statements of the clients and is less likely for giving in to the demands of the clients.
The auditors, who are independent, truly are less tied up with clients and hence, they are able
for provide higher quality audits. If the auditors are not associated with clients then it allows
auditor for exercising the unimpeded judgment, while planning and conducting the audit (Du,
Ronen & Ye, 2015).
Since, the auditor independence is the critical issue for profession of auditing; there
are various studies that have been performed in this particular area. The threat to
independence of auditor includes client importance, tenure of auditor and the services of non-
audit. The importance of client is consists of degree to which the auditors are economically
dependent on clients (Boyle,DeZoort&Hermanson, 2015). Afterservices are provided to
clients then the audit firm receives remunerations. This results in the auditors being
financially bonded to clients. The client constitutes larger part of the portfolio of the auditor.
The auditor has the incentives for retaining the clients to the warrant the future sources of the
revenues and profits and hence, for compromising the independence and acting in the favor
of clients. Moreover, auditor independence is also adversely affected by the non-audit
services (Haron et al. 2016). The external auditor receives more income when they provide
the service of non-audit to clients. This results into greater economic dependence. Further,
tenure of audit leads towards impairments of the independence. When the relationship of
auditor and the client lengthens, then auditor with the client develops close relationships and
it becomes more likely for acting in the favor of the management that results in the reduction

4INTEGRATED ACCOUNTING PROJECTS
of the objectivity and quality of audit (Inua & Abianga, 2015).In addition, all these issues in
the auditing have led towards adoption of the standards. However, for auditing practice to be
done ethically, ethical standards code needs to be adopted, which is again great issue.
Therefore, this research paper includes examinations andfinding in the area of challenges in
the practice of audit (Hamid, 2015).
2. Research Problem
This particular research paper discusses the problem related to recent updates and
challenges in the auditing practice. In this respect, the issues relating to the quality of auditors
and the independence of the auditors are discussed. The quality of the audit depends on the
independence of the auditor. Auditing value heavily depends upon the perceptions of public
relating to the auditors independence. As independence of the auditor increases, the quality of
audit also increases. Independence of the auditor is defined as the fulcrum of quality of the
audit in the recent period. It seems to be compromised, as most of the company whose
financial statements were audited and issued the unqualified reports has collapsed in short
span of time, after there was news regarding grossly misstatements of the financial statements
(Jiang, Wang & Wang, 2018). The auditor independence helps in determining the quality of
assets. The corporate collapse has caused global economic meltdown in middle 2000. This
has led to the confusion and apathy about role auditors that ought to play for safeguarding not
only their profession but also restoring and building the confidence of the investors with the
view for reducing the expectancy gap of the audit, which have existed after collapses of these
firms (Brown,Gissel& Gordon Neely, 2016). The collapses of the firms has caused erosion of
the fund of shareholders and further widened gap between the management and the
shareholders. Moreover, this has also resulted into the loosing of fate of the creditors and
other providers of the funds.These huge levels of the scandals have hurt the reputations and
reliability of the auditors. Therefore, in order for restoring the credibility of professions of
auditing, number of new regulations has been made such as Sarbanes-Oxley Act in US, Code
of Professional Conduct in the South Africa and analysis model in the Europe. All of these
issues have emphasized the independence of the auditors (Jensen, Kim & Yi, 2015). This has
resulted into the requirement of the new research in this area. This particular study would
examine the different challenges of the audit practice, impacts of the auditor independence on
the audit quality, analysis of ways with the help of which credibility of the professions of
auditor can be restored and evaluation of the importance for instilling the good level of the
governance in auditing firm. The audit consequently requires being reliable and the

5INTEGRATED ACCOUNTING PROJECTS
stakeholders should feel confident regarding the audited information that is provided by client
is reliable andobjective.Therefore, this study would contribute positivelytowards audit
profession (Kaziliūnas, 2014).
2.1 Research Aims and Objective
This resaerch paper has the aims for understanding the recent updates and challenges
in the practices of the auditing and assurences. This research would be of great help to
analyze the different issues that are being faced in the profession and it would suggets the
ways in improvingcurrent challenges faced by the industry. Henece, following are objectives
of this research:
 To investigate major challenges that are faced in the practices of the auditing.
 To examining the impacts of independence of auditor on audit quality.
 To find the ways by which creditability of professions of the auditors can be able to
be restored
 To evaluate the importance for instilling good level of governence in the auditing
firm.
2.2 Research Questions
 What is the impact of auditors’ independence on quality of the audit?
 How can the creditability of auditor’s professions be restored?
 How can a good level of governance be instilled in the audit firms?
2.3 Practical Deployment within Industry
This research paper would be of great help in the professions of the auditing and
deployed within the industry. The increase in the corporate failures has affected the auditing
profession in the worst manner. The investors and other stakeholders have loosed the
confidence in the auditing practices. Therefore, the research on the issues of the auditing
practice would help the professionals and the industry to understand where they are wrong
and what steps they would be taking for increasing their relevance of their system and the
practices (Lennox, 2015).
The auditor has the responsibility for expressing the independentand objective opinion
on company’s financial statements. They ask the management for communicating the
responsibility of management for financial statements to the auditor in the letter of
representation. They are individuals, who are being trained for reviewing and verifying that

6INTEGRATED ACCOUNTING PROJECTS
data of accounting provided by the audited company correctly corresponds to activities,
which have par taken by company (Li et al. 2016). The professionals of the auditing
examines and verifies the financial statements of organization and records as well they makes
sure that the company’s financial statements and elements in it is recorded in compliance of
the concerned laws and standards. They are being responsible for defining engagements terns
between client and the auditor, planning of the scope and conduct of audit, compiling the
information of auditing and reporting the audit results (He et al. 2017). The primary goal of
the auditor is for finding and corrects the material misstatements. If the data presented in the
statement are wrong, incomplete or missing, which is made accidently or deliberately, the
auditors’ drills down the sources for each piece of the data and steps to ask the client
regarding the same (Svanberg & Öhman, 2015).
Therefore, this particular research would help in reducing the corporate scandals to
the minimum and help in the introduction for the changes. In the current scenarios, the
business organizations are facing great challenges because of the changing business
environment andhigher level of competition. This requires business organization for
presenting their financial information with more transparency and accuracy that is free from
any kind of material misstatements and fraud. The investors and other stakeholders base their
decision on the information that is provided by organization. From all the stakeholders of the
organization, investors are very much interested in financial statements information of
company. Moreover, the financial statements are used by the shareholders for assessing the
risk and the return of their investments in organizations and taking decisions of investments
that are based on the analysis done by them such as fluctuations of the profits helps in
indicating higher profits. Hence, the financial statement provides the basis for decisions of
the potential investors. Although, if the company is involved in falsifying the asset’s value,
for instance, if the company’s stock investment losses its value then the company is supposed
for reflecting it on balance sheet. If they are not doing so, the asset of the company will look
more valuable than what actually it is (Hardies, Breesch & Branson, 2016). The company
doing misstatement provides incorrect statement or gives the false information. It does not
only questions their credibility but the shareholders who are taking the decisions based on it
suffer from huge losses in future, when the wrongful act of the company is detected.
Therefore, the inaccurate or the misstated number always results into the inaccurate financial
reporting that further leads to the bad decision-making. In this context, auditors of the
company are required for detecting the risk of the material misstatements. The material

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misstatement is concerned with the risk of company’s financial statements, which has been
misstated to the material degree. It is the criminal offense. The greatest example in this
concern is of the accounting scandal of the Enron Corporation in 2001. This particular
scandal has broken and affected the auditors such as Arthur Anderson. This has resulted in
the cutting down of the Big Five to Big Four.Hence, auditors have the responsibility to work
with integrity and honesty to detect any kind of material misstatement, while developing the
plan of audit (Svanberg&Öhman, 2015).
The research done in this paper is of great help in the audit profession and industry
because this research paper has highlighted various important issues and challenges facing
the industry. The credibility of the auditing profession and industry is being questioned
because of several reasons. Further, decline in the auditors’ quality has raised matter of the
deep concern. It is because of the fact that the major firms of audit have failed for spotting the
key problems. They have been failed for exercising the professional skepticism. This research
has addressed the major concerns and issues faced by the industry (Ghosh & Tang, 2015).
Hence, when the auditors will be under the scrutiny from regulators, investors
andgovernment then this would enhance the disclosures, regulations and lower conflict of the
interests for improving the audit quality.There is the requirement of the more effective and
strict regulations and laws in the auditing profession. Maintaining the audit quality is of at
most important for the industry. The industry of audit is facing the significant changes in the
phase of the financial crisis andcorporate scandals. Therefore, measures should be taken for
the purpose of changes in the audit and implementing the change and leanings from the issues
raised in the research.This research has contributed towards providing of the new insights on
the auditing quality, which may have overlooked in the existing literature that would
ultimately help in improving quality of audit (Hardies, Breesch& Branson, 2016).
2.4 Conceptual Framework
The review of concepts underlying subject matter in the considerations helps in
providing the platform for the better appreciation of subject matter and clarifies some of the
areas of the misconceptions by using the availability of the literature. The conceptual
framework helps in representing the synthesis of the researcher’s literature for the way of
explaining the phenomenon. It is the description or the depiction of the given system, which
helps in representing the key relationships between elements of system used. Therefore, in
this particular research paper, conceptual framework includes selecting the investigation area,

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reviewing previous research, formulating hypothesis, designing hypothesis, conducting study,
analyzing results and finding whether findings supports hypothesis or not.
2.5 Hypothesis Formation
The hypothesis formulation is the act in which the researcher tests the assumptions in
relation to the population consideration. The methodology, which is employed by the
researcher, depends upon nature of data that is used andreason for analysis. Further, deep
understanding of auditing practice challenges has resulted into formulation of research
hypothesis. In this respects, the hypothesis that can be formulated for this research paper are
as follows:
 H1- The auditors’ independence affects the quality of audit.
3.Research Methodology
3.1 Research Design
The Research design is the framework of the techniques and methods that are chosen
by the researcher for combining several components of researches in the reasonably logical
manner forhandling efficiently the problem of research.It provides the insights regarding the
way; research will be conducted with the help of using the particular methodology. It helps in
indicating the choices of the techniques for interpreting findings of the research for
addressing topic of research in the most appropriate, precise and rational manner. This
research paper only qualitative research has been applied for investigating, exploring and
exploring the challenges of the audit practices. These factors include familiarity to the client,
financial conditions of firms and the sizes of the clients relating to audit firm’s sizes. The
research design adopted for this research paper is the ex-post facto. Moreover, the secondary
data sources are employed for achieving the objectives of study. This method is considered
effective and most appropriate because of the nature of study that is review of the interrelated
literature of auditor independence influence on quality of audit.
3.2 Kinds of Data used
For conducting the chosen research both primary and the secondary data would be
used. The primary data would be collected from suitable respondents who are the clients of
audit firms. The data would be collected through questionnaires prepared according to the
research objective. The feedback collected through this method would serve as the primary

9INTEGRATED ACCOUNTING PROJECTS
data of research. Secondary data would be collected from journals, articles and other financial
documents belonging to the clientele of audit firms.
3.3 Data Collection Method
The method of data collection is divided into the two categories. The first one is
secondary method of the data collection and the second one is primary method of data
collections. It is one one of the most important part of the research as if there would be any
inaccuracy of the data then it would impact results of the study and it leads towards results,
which are invalid and inappropriate. The method of the data collected used in this study is
extensive amount of the secondary data, which is collected for the study on the updates and
challenges in the audit practice. The research is based on the reports published by the
different past researchers on the research topic chosen. Further, the different other sources
that includes various authentic reports and ariticle on the audit independence, audit quality
and other issues of auditing have been collected and explored for the interpretations of the
knowledege and judgements of the research findings to get the adequate information.
3.4 Sample and sample size
The sample size selected for conducting the research can be related to the total
number of respondents who have provided their feedbacks in the data collection process. For
getting accurate data and information of the research, a total of 50 respondents have been
selected from different firms who are the major clients of audit companies. The collected
responses would serve as the primary data for performing analysis.
3.5 Data Analysis Plan
For performing data analysis the excel software would be used. Suitable charts,
graphs and other figures have been prepared and analyzed for providing proper explanation to
the research questions. This method would be adopted for achieving the desired outcome of
the research.
4. Limitations of Research
The topic of the resaerch is consists of the vast subjects. This research paper is
consists of the limitations, which needs to considered for the interpretations of the findings.
Auditors independence and quaity issues used in this research paper is considered to be
sensitive topic for the few respondents as they don’t want for saying reagarding the extent of

10INTEGRATED ACCOUNTING PROJECTS
their independence andwhether they delivers bad quality of audit. Moreover, this resaerch is
conducted by taking more on the auditor’s point of view. However, if client’s firms
perspective should have been taken, the more broader oevrsights would have been gained
from it.Further, our findings are based on the data of the reports of the individuals, which are
likely drawn from their memory. Hence, these baises of the individual and idiosyncratic
experiences may hamper the report. In addition, the framework of this research has been
developed with the help of consulting literature and limited interviews. Therefore, it may not
be considered comprehensive in either of the factors or elements of the factors, which led
towards failures of the audit. Lastly, the research size taken in this resaerch paper is relatively
small, which might results into not covering of the major issues. Hence, because of this
important aspect of the research may be missed out and as a result of which the conclusions
may get different. However, future research si encouraged for exploring these particular
possibilities and testing the conditions of the boundary of the framework.

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5. Reference
Boyle, D. M., DeZoort, F. T., &Hermanson, D. R. (2015). The effects of internal audit report
type and reporting relationship on internal auditors' risk judgments. Accounting
Horizons, 29(3), 695-718.
Brown, V. L., Gissel, J. L., & Gordon Neely, D. (2016). Audit quality indicators: Perceptions
of junior-level auditors. Managerial Auditing Journal, 31(8/9), 949-980.
Crockett, M., & Ali, M. J. (2015). Auditor independence and accounting conservatism:
Evidence from Australia following the corporate law economic reform
program. International Journal of Accounting & Information Management, 23(1), 80-
104.
Dattin, C. F. (2017). Developments in France regarding the mandatory rotation of auditors:
Do they enhance auditors’ independence?. Accounting History, 22(1), 44-66.
Dhaliwal, D. S., Lamoreaux, P. T., Litov, L. P., &Neyland, J. B. (2016). Shared auditors in
mergers and acquisitions. Journal of Accounting and Economics, 61(1), 49-76.
Du, N., Ronen, J., & Ye, J. (2015). Auditors’ role in China: The joint effects of Guanxi and
regulatory sanctions on earnings management. Journal of Accounting, Auditing &
Finance, 30(4), 461-483.
Garcia-Blandon, J., &Argiles, J. M. (2015). Audit firm tenure and independence: A
comprehensive investigation of audit qualifications in Spain. Journal of international
accounting, auditing and taxation, 24, 82-93.
Ghosh, A. A., & Tang, C. Y. (2015). Assessing financial reporting quality of family firms:
The auditors׳ perspective. Journal of Accounting and Economics, 60(1), 95-116.
Guiral, A., Rodgers, W., Ruiz, E., & Gonzalo-Angulo, J. A. (2015). Can expertise mitigate
auditors’ unintentional biases?. Journal of International Accounting, Auditing and
Taxation, 24, 105-117.
Hamid, K. C. A. (2015). A Review on Independence and Authority of Internal
Auditor. Advanced Science Letters, 21(6), 1621-1623.
Hardies, K., Breesch, D., & Branson, J. (2016). Do (fe) male auditors impair audit quality?
Evidence from going-concern opinions. European Accounting Review, 25(1), 7-34.

12INTEGRATED ACCOUNTING PROJECTS
Haron, H., Ismail, I., Ganesan, Y., &Hamzah, Z. (2016). AUDIT EXEMPTION FOR
SMALL AND MEDIUM ENTERPRISES: PERCEPTIONS OF MALAYSIAN
AUDITORS. Asian Academy of Management Journal, 21(2).
He, X., Pittman, J. A., Rui, O. M., & Wu, D. (2017). Do social ties between external auditors
and audit committee members affect audit quality?. The Accounting Review, 92(5),
61-87.
Husnin, A. I., Nawawi, A., &PutehSalin, A. S. A. (2016). Corporate governance and auditor
quality–Malaysian evidence. Asian Review of Accounting, 24(2), 202-230.
Inua, O. I., &Abianga, E. U. (2015). The Effect of Internal Audit Outsourcing on Auditor
Independence: The Nigerian Experience. Journal of Finance and Accounting, 6(10).
Jensen, K., Kim, J. M., & Yi, H. (2015). The geography of US auditors: information quality
and monitoring costs by local versus non-local auditors. Review of Quantitative
Finance and Accounting, 44(3), 513-549.
Jiang, J. X., Wang, I. Y., & Wang, K. P. (2018). Big N auditors and audit quality: New
evidence from quasi-experiments. The Accounting Review.
Kaziliūnas, A. (2014). The implementation of quality management systems in service
organizations.
Lennox, C. S. (2015). Did the PCAOB's restrictions on auditors' tax services improve audit
quality?. The Accounting Review, 91(5), 1493-1512.
Li, L., Qi, B., Tian, G., & Zhang, G. (2016). The contagion effect of low-quality audits at the
level of individual auditors. The Accounting Review, 92(1), 137-163.
Narayan Roy, M. (2015). Statutory Auditors' Independence in the Protection of Stakeholders'
Interest: A Perceptual Study. IUP Journal of Corporate Governance, 14(1).
Svanberg, J., &Öhman, P. (2015). Auditors' identification with their clients: Effects on audit
quality. The British Accounting Review, 47(4), 395-408.
Tepalagul, N., & Lin, L. (2015). Auditor independence and audit quality: A literature
review. Journal of Accounting, Auditing & Finance, 30(1), 101-121.
Van Rinsum, M., Maas, V. S., &Stolker, D. (2018). Disclosure Checklists and Auditors’
Judgments of Aggressive Accounting. European Accounting Review, 27(2), 383-399.

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6. Appendix:
Questionnaires for professionals:
1. Which level of audit you are currently working?
 Senior auditor
 Partner
 Supervision
 Assistant
2. Is it believed by you that the level of fees charged by auditing firms or auditors give
rise to independence issues?
 Yes
 No
 Not applicable
3. Should there be an internal audit function?
 Yes
 No
 Not applicable
4. How well the essence of your service is captured by the quality audit process
 Not at all
 Not very well
 Very well
 Quite well
5. How can the quality of audit process be improved?
6. Is the service provided by the internal audit in relation to fraud is sufficient?
7. Does the audit report content communicate fairly, clearly and accurately?

14INTEGRATED ACCOUNTING PROJECTS
8. Is the audit report issued in a timely manner?
 Excellent
 Above average
 Average
 Below average
 Poor
9. Are the audit results valued by the company?
 Excellent
 Above average
 Average
 Below average
 Poor
10. Does the auditor conduct audit in an efficient manner
 Excellent
 Above average
 Average
 Below average
 Poor