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Finance & Accounting
Pages 6 (1506 words)
Name: Course: Date: Audit Reforms The background to the EC audit reform proposals Auditing is a profession that is entrusted with the responsibility of giving fair and balanced opinion, regarding the truth and accuracy of the financial transactions and reporting of the client firms (Garcia, 2005 p13).
This has resulted in the emergence of the phrase that “auditors are the dogs that did not bark during the crisis”, and thus their role in helping avert financial crisis through detecting and reporting any anomaly or perceived misrepresentation of the financial truthfulness of organizations has been put to question (Fielding, 2011 p35). Therefore, considering that there are four major auditing firms that operate globally and monopolizes the European Union regions, namely PricewaterhouseCoopers, Ernst & Young, Deloitte and KPMG, concerns have always arisen regarding the collusion between the auditing firms and their clients to give unfair and unbalanced financial reporting information and opinion (Clifford, n.p.). This has necessitated the need for introducing reforms that would see the already existing collusion, as well as the conflict of interest in auditing, effectively addressed (IFAC, 2013 p36). EC audit reform proposals and the underlying areas of concern that they seek to address First, the EC audit reform proposes a system of compulsory rotation of audit firms amongst their clients (Crump, 2011 n.p.). ...
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