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Post Financial Crisis: Role of Audit - Essay Example

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This report is an attempt to analyze the role of audit and the actual responsibility of the auditors toward the stakeholders on the basis of the concept of extended audit as suggested by ACCA in its report ‘A Framework For Extended Audit Reporting’. …
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Post Financial Crisis: Role of Audit
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Post Financial Crisis: Role of Audit

As auditing is generally based on sample testing therefore I think enhanced audit will eliminate the limitation of sample testing. Thus from my point of view of making the audit report more informational and useful for the general public in making an informed decision enhanced audit will be quite beneficial. In my opinion the expectation gap is will reduce with the help of the enhanced audit report as the users will be more informed about the scope of the audit. Apart from the benefits I believe that the enhanced audit could pose some limitations to the companies. I think one of the major limitations of enhanced audit cost the company more than having ordinary audit report, would definitely increase the liabilities of the auditors. I think the having an extended audit report will create a sort of disturbance in the company as the auditors will need more time to produce an extended audit report. Extended audit does have both advantages and limitations in my opinion the extended audit would be beneficial for the stakeholders and other users of the audit report. Therefore in my opinion the enhanced audit should go ahead. Implications of Corporate Governance Audit Corporate Governance and audit Corporate Governance is the policies which define how a corporation would be controlled. The principle of corporate governance is respecting the rights of the stakeholders of the company. The company management should also ensure that the information disclosed by them is transparent; also they are maintaining the corporate social responsibility and all these can be achieved when there is enough communication between the board of directors and all the company employees. In short...
This paper focuses upon Corporate Governance as the policies which define how a corporation would be controlled. The principle of corporate governance is respecting the rights of the stakeholders of the company. The company management should also ensure that the information disclosed by them is transparent; also they are maintaining the corporate social responsibility and all these can be achieved when there is enough communication between the board of directors and all the company employees. In short corporate governance means the decision making and monitoring of the performance by the company management to the best interest of the stakeholders of the company and there comes the role of auditor. For making the decisions, for monitoring the systems the company management or the investors need transparent information, the auditor check whether the information provided to them is transparent or not. The international Standard of Accounting 260 requires determining the persons who are in charge of governance by the auditors. The auditors are there to look after that the financial statements are not containing any error or there is any fraud happened during the construction of the report. After the bankruptcy of Enron the Sarbanes-Oxley act was introduced, which requires reports on the internal control effectiveness separately. The ISA, the SOX act and the EU 8th directive all need to communicate to the board about the details of the audit, the limitations of the audit, the weakness of the accounting control systems followed by the company and if any uncertainty associated with the company’s future by the auditor. ... Read More
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