Threats to Auditor Independence PDF
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Added on 2020-01-28
Threats to Auditor Independence PDF
Added on 2020-01-28
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Audit assignment
TABLE OF CONTENTSintroduction......................................................................................................................................3ASSIGNMENT QUESTION 1........................................................................................................3(a) Identifying and evaluating any threats in relation to auditor independence...........................3(b) Identifying any safeguards to those threats identified............................................................5ASSIGNMENT QUESTION 2........................................................................................................5(a) Describing two business risk to MSL for planning the 2015 audit........................................5(b) Identifying the account balance that have impact directly by the audit risk..........................6CONCLUSION................................................................................................................................7
INTRODUCTIONAudit refers to process of the completing the activities related to completion of theinternal operation. This enables corporation to find out the common mistakes and necessaryremedies provided for the same for long survival of the business. Present report is based on twodifferent case studies under which threats related to audit independence have been consideredalong with provided safeguards. In addition to this, business risk and its role in planning the auditprocess have been presented in the light of provided case scenario. Moreover, the audit risk havealso been explained effectively.ASSIGNMENT QUESTION 1(a) Identifying and evaluating any threats in relation to auditor independenceThere are different types of threats associated with the auditors independence such asself-review threat, self-interest and multiple referrals as well as Ex-staff and partners threats arealso considered. It assists corporation to understand the threats and accordingly take thecorrective action for remedy of the people who are suffering. These threats are explained asfollows-The self-interest threat-Such kind of threats occurs when auditors work on the basis offinancial and emotional as well as any other kind of self-interest related work towards theorganization. It affects the work of auditing to a great extent (Abbott and et. al., 2016).The self review threat-It is the another kind of issue under which company may faceissue related to self-review threat under which auditors act in the biased manner. Thisaffect overall work of the business in a negative manner. It is because auditors will notfind significant mistake in their own work and accordingly they might provide the fakeaudit report.The advocacy threat-Under this, auditors work as the advocate for or against an auditclients rather focusing on taking the unbiased decision. Such kind of practices will havesignificant impact on the performance of the business and accordingly profitability of thebusiness goes down to a great extent (Dogui, Boiral and Heras‐Saizarbitoria, 2014).The familiarity or trust threat-This kind of threat occur to business when the charteredaccount in the business affect the financial reporting by accepting the particular gift or
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