Comprehensive Report: Ethics, Methodology, and Audit Report Analysis

This report delves into the critical aspects of ethics and methodology within audit reports, emphasizing the importance of ethical conduct and sound procedures in financial reporting. It explores the ethical implications of auditing, including impartiality, lack of standards, and intimidation, and discusses ethical issues faced by business organizations such as trust, integrity, and ethical decision-making. The report outlines the methodology of audit reports, covering audit planning, audit engagement, understanding internal control systems, and the examination of accounting systems in line with GAAP principles. It highlights the significance of audit reports in evaluating a company's financial position and performance, and the role of auditors in ensuring the accuracy and reliability of financial information. The report also touches upon the importance of ethical practices and codes of conduct within healthcare organizations and how audit reports can impact the quality of services provided. This report serves as a comprehensive guide to understanding the ethics and methodology of audit reports, offering valuable insights for students and professionals in the field.

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REPORT ON ETHICS AND METHODOLOGY OF AUDIT
REPORT
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Executive summary
Ethics and methodology of the auditor's report in a business organisation is considered as an
important aspect in order to examine whether the business is following ethical codes of conduct
and practices to evaluate and analyse financial statement and publish auditor’s report
representing true and fair view in front of the shareholders and investors. In this context
understanding the auditor's report with different ethical implications and issues, audit planning
and procedures with audit engagement and understanding of the accounting system by the
auditors are the important aspects. Based on the ethics, audit planning and procedures a report is
to be conducted in this aspect in order to understand the assignment appropriately and
effectively.
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Table of Content
Ethics of Audit report......................................................................................................................4
Ethics...............................................................................................................................................4
Audit report......................................................................................................................................4
Ethical implications of auditing.......................................................................................................5
Ethical issues in business.................................................................................................................5
Justifications of Ethics in auditing...................................................................................................6
Methodology of audit report............................................................................................................7
Planning of audit..............................................................................................................................7
Audit engagement............................................................................................................................7
Understanding of internal control system........................................................................................8
Understanding of accounting system...............................................................................................8
Report..............................................................................................................................................9
Reference List................................................................................................................................10
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Ethics is all about the systematic, recommending and defending fields of concepts of right or
wrong behaviour. According to the various philosophers there are three types of ethical theories
such as normative ethics, metaethics and applied ethics. In this assignment the concept of
business ethics should be understood by the management team, directors and members of a
company appropriately and properly (Arnold et al. 2015, p.124). The study of a proper and
accurate business policies and procedures such as insider trading, corporate governance,
fiduciary and the corporate social responsibility are considered as the business practices in this
regard. At the time of decision making and making of profit a company should have to follow
law of business ethics and policies in order to ensure a certain level of trust exists among the
market participants, consumers and members of a company (Ferrell and Fraedrich, 2015, p.227).
Auditor’s report of an organisation should be accurate and appropriate. Auditors report is a
report recorded in the annual statement and annual result in order to see a company’s financial
statements according to the GAAP principles and provisions and it is considered as the auditor's
opinion that are included in the auditor's report (Menon and Williams, 2015, p.123). There are
three categories in an auditor’s report such as in the first level auditors and directors’ duties and
responsibilities, second is GAAP principles and rules, and in the third stage auditor's opinion
should be included.
An audit report is of two types such as qualified audit report and unqualified audit report.
Qualified audit report is a report in which the auditors can give an opinion regarding a
company’s not following the GAAP rules and principles at the time of preparation of financial
statement and annual report (Clarke, 2015, p.223). This report does not represent the true and fair
view of a company at the end of a financial year.
An unqualified audit report comprises of the auditor's opinion regarding the preparation of
financial statement and annual report by following the GAAP rules and accounting techniques
and principles accurately and appropriately by which the execution of true and fair view of
financial statement can be evaluated effectively and efficiently (Lindström, 2015, p.312).
Ethical implications of auditing should be understood and analysed properly and appropriately
by the management team and auditors of a particular organisation effectively and efficiently.
Auditing is the examination of the organisational bookkeeping and accounting system with the
organisational quality control system by which auditors can ensure the quality of goods and
services (Fiolleau and Kaplan, 2016, p.15).
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Audit team of an organisation who can examine the quality management of the company can
compromise in case if the company face economic ties in this regard. In this assignment
impartiality is considered as one of the important ethical implications of auditing which should
be interpreted by management team and auditors effectively and efficiently (Ma’Ayan and
Carmeli, 2015, p.17).
Lack of standard is an ethical implication, though the audit team of an organisation follow
auditing and accounting standards properly, the individual firm sometimes do not follow such
standards which can lead to lack of integrity.
Intimidation is an ethical issue. Company can emphasise their ability and power in order to
bargain with suppliers and officials (Sezer et al. 2015, p.80). Auditor has to examine such power
at the quality control methods and can go easy on the company and publish unqualified audit
report.
A company’s quality control management should be examined by the auditor and if the company
offers some non audited services, in this case the audit team can compromise with the
organisation that is considered as an ethical implication of auditing.
Nowadays business organizations face a range of ethical issues in this complex business
environment. It is the duty and responsibility of the business organisations in order to develop
certain rules and code of conducts and ethics that should be followed appropriately by every
members of an organisation. In this respect the auditors and management team should have to
analyse and evaluate the ethical issues in business organisations (Bazerman and Sezer, 2016,
p.103).
Ethical issues are-
Trust and integrity are the main essential or fundamental issues that a business organisation must
face. A range of integrity and honesty should have to follow by a company at the time of dealing
with customers in order to sell products and services and increase profitability as well as
revenue. If the customer has perceived that the organisation is exhibited unwavering
commitment to the ethical business policies and practices can lead to success of the organisation
effectively.
Ethical decision making is considered as a useful method in order to explore ethical courses and
ethical dilemmas to protect employee, workers and rights of customers. A company should have
to run their business by following the codes of conducts and practices based on which
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management team have to make certain decisions effectively and efficiently (Karaibrahimoglu
and Cangarli, 2015, p.20).
Diversity regarding the recruitment of workforce in an organisation can enforce equal
opportunity and arrangement of training and development programme for the workers. It is
considered as the important element of an organisation in order to maximise the value of workers
effectively and efficiently. Recruitment of new workers can enhance the productivity level which
will lead to operational efficiency and effectiveness.
Therefore every organisation should have to evaluate ethical practices and code of conducts in
order to remove ethical issues from an organisation appropriately.
Ethics is code of conduct, practices and procedures that every business organisation should have
to possess effectively and efficiently. In this report of ethics and methodology of auditor’s report
justifications regarding ethics in auditing should have to evaluated and interpreted by the
management team of an organisation appropriately (Lehnert et al. 2015, p.215). Every business
organisation should have to appoint auditors in order to review the financial statements annual
report through which true and fair view of the financial report can be evaluated. If the auditors
publish unqualified audit report comprising that the organisation have followed all the
accounting principles and provisions mentioned in GAAP, then it can be concluded that the
organisation have followed all the ethical codes of conducts and principles appropriately and
effectively (Kaptein, 2015, p.416). On the other hand the auditors should also have to represent
original financial position in their audit report according to the auditing standards and regulation
properly.
In this assignment of ethics and methodology of audit report, in this context the first task is to
plan an appropriate audit and depending on which execution of audit accordingly and effectively.
Planning and execution of audit report can be described as follows-
In the planning process of auditing at the first stage management control of an organisation
should have to be examined and evaluated by the audit team in order to represent audit report
with true and fair view of the organisation (Gurov and Milgunova, 2016, p.115). The board of
directors and management team should have to represent all the financial information to the
auditors while preparing the audit report.
In this report the details of bookkeeping method and accounting records is considered the
primary compliance and the first thing the audit team will request to the management and
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directors. In this record details of shareholders interest, dividend, details of investors and
stakeholders should be included.
Planning of audit include identification and evaluation of the strengths, weaknesses,
opportunities and threats of an organisation in order to mitigate the credit risk effectively and
efficiently by the auditors (Bills et al. 2016, p.244).
Execution of audit is prepared by the lead auditor of the audit team in order to determine the
planning process of audit and its expected results effectively and appropriately.
Audit engagement is the first stage of an audit performed by the auditors of an audit
methodology including the purpose, scope and functions of the audit accordingly. Audit
engagement is the process of negotiation between the audit team and the client company
describing that the client company is appointing auditors in order to examine the true and fair
view of the financial statement and company’s management and internal control system properly
and accurately (Cassell et al. 2016, p.231). Annual report comprising of audit report should be
published in front of the shareholders, investors and customers of the organisation and the audit
engagement should have to done by the auditors in order to attract new customers for the client
company. Therefore every audit team should have to conduct audit engagement between Client
Company and auditors.
Internal control system is the process of assuring the fulfilment of organisational goals in order
to gain operational effectiveness and efficiencies, regulations and policies, reliable accounting
and financial report of the organisation. Internal control system in accounting and auditing is
considered as an integral part of a company's business policies and procedures and good
operational practices (Kiesow et al. 2015, p.156). Main objectives of an internal control system
in auditing of an organisation are as the evaluation and interpretation of the level of financial
performance in all departments, protection and examination of maximum utilisation of resources
against fraud, waste and inefficiency of resources appropriately, Ensuring reliability and
accuracy in the business and operational data and securing compliance regarding accounting and
business policies and practices in order to represent true and fair view of the accounting report.
Therefore in the methodology part of auditor's report internal control system is considered as an
important method.
Understanding of the accounting system by the auditors at the time of preparation of audit report
is an important aspect and whether uses of accounting tools and techniques according to the
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GAAP principles are done by the business organisation should be examined by the audit team in
an appropriate manner (Rahman and Fachri, 2016, p.65). Understanding of financial statements
and accounting system is an essential part in auditing in order to represent reliable and true, fair
view of audit and annual report. In this context the auditors should have to determine and
examine the reliability and operational efficiency of the accounting system which will help to
prepare audit report effectively and efficiently.
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Report
Every business organisation should have to represent audit report appropriately and effectively,
in order to review the financial position and performance of the organisation for every financial
year. In order to view the strengths, weaknesses, of an organisation properly and to judge
reliability of financial information efficiently a company should have to appoint audit team.
In this way health and social care organisation should also appoint audit team in order to
examine proper utilisation of resources, quality of services and treatment to service users and
clients. In this context the audit team should have to evaluate the effectiveness of treatment and
services provided to the patients in order to publish audit report which can attract new customers.
Code of conducts, ethical practices and procedures should have to be followed by every health
care organisation.
In this aspect the main objective of a healthcare organisation published in an audit report should
be to improve the use of FICB and post op care with documentation whether the professionals,
service providers and physicians have provided services and treatment accordingly and
appropriately. In the audit report of the health care organisation it is mentioned that the
organisation should have to reduce the requirements of Opioid in the FICB group. The auditor’s
report support the use of FICB in the acute management as it is considered as an effective and
efficient procedure in order to reduce opioid side effects among the elderly group of patients. In
the auditor's report it is mentioned that the production of an instructional audiovisual
presentation on FICB should be required by the health care organisation to incorporate sign
guidance to improve peri-operative care effectively and efficiently in this respect.
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Reference List
Arnold, D.G., Goodpaster, K.E. and Weaver, G.R., 2015. Past Trends and Future Directions in
Business Ethics and Corporate Responsibility Scholarship. Business Ethics Quarterly, 25(04),
pp.v-xv.
Bazerman, M.H. and Sezer, O., 2016. Bounded awareness: Implications for ethical decision
making. Organizational Behavior and Human Decision Processes, 136, pp.95-105.
Bills, K.L., Lisic, L.L. and Seidel, T.A., 2016. Do CEO Succession and Succession Planning
Affect Stakeholders' Perceptions of Financial Reporting Risk? Evidence from Audit Fees. The
Accounting Review.
Cassell, C.A., Hansen, J.C., Myers, L.A., Seidel, T.A., Fayetteville, A.R., Ogden, U.T. and
Provo, U.T., 2016. Does the Timing of Auditor Changes Affect Audit Quality? Evidence from
the Initial Year of the Audit Engagement.
Clarke, P., 2015. Construction Audit Report. Corangamite Regional Landfill, Cell, 13.
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson
Education.
Fiolleau, K. and Kaplan, S.E., 2016. Recognizing ethical issues: An examination of practicing
industry accountants and accounting students. Journal of Business Ethics, pp.1-18.
Gurov, V. and Milgunova, I., 2016. Improving of assessment methodology of the audited
organizations performance at the stage of audit planning. Економічний часопис-ХХІ, 157(3-4
(1)), pp.115-117.
Kaptein, M., 2015. The effectiveness of ethics programs: The role of scope, composition, and
sequence. Journal of Business Ethics, 132(2), pp.415-431.
Karaibrahimoglu, Y.Z. and Cangarli, B.G., 2015. Do auditing and reporting standards affect
firms’ ethical behaviours? The moderating role of national culture. Journal of Business Ethics,
pp.1-21.
Kiesow, A., Fellmann, M., Zarvic, N. and Thomas, O., 2015. Managing Internal Control:
Designing a Wiki-based Information System for Continuous Process Assurance.
Lehnert, K., Park, Y.H. and Singh, N., 2015. Research note and review of the empirical ethical
decision-making literature: Boundary conditions and extensions. Journal of Business Ethics,
129(1), pp.195-219.
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Lindström, C., 2015. Audit report lag-The effect of Non-audit services & Audit tenure.
Ma’Ayan, Y. and Carmeli, A., 2015. Internal Audits as a Source of Ethical Behavior, Efficiency,
and Effectiveness in Work Units. Journal of Business Ethics, pp.1-17.
Menon, K. and Williams, D.D., 2015. Audit report restrictions in debt covenants. Contemporary
Accounting Research.
Rahman, A. and Fachri, Z., 2016. Region’s Financial Accounting Information System and the
Quality of Local Government Financial Reports. Information Management and Business Review,
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Sezer, O., Gino, F. and Bazerman, M.H., 2015. Ethical blind spots: Explaining unintentional
unethical behavior. Current Opinion in Psychology, 6, pp.77-81.
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