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Different aspects of auditing - Essay Example
An attempt has been made in this paper to comprehend different aspects of auditing specially emphasize on threats of independence, auditors liability, ethical dilemma and relationship between internal and external auditor with social responsibility. Question 1,3,4 and 2b have been attempted…
In addition, in question 4 the responsibility in relation to external and internal audit toward the society has been discussed.
Loebbecke A. (2000) stated that auditing has historically been concerned with the faithful and accurate accounting of economic resources. This concern arises from the imperative of maintaining accountability in the presence of agency conflicts between the management and owners of a firm. Over time, this notion of accountability has expanded as interest groups established new standards of performance. The underlying philosophy has, however been remained constant: essentially one of ensuring that accounting records have been kept and verifying compliance with generally accepted accounting principles.1
Hayes, R., Dassen R. , et al, (2005) addressed that the independence is one of the most pivotal traits of being an auditor. Hussy, R., (1999) has elucidated independence as the fundamental principle that the auditor must be, seen to be, independent to enable them to behave with integrity and make objective professional and business judgment. Independence could be of two forms as-
According to Hayes, R., Dassen R., et al (2005), independence is potentially affected by self-interest, self-interview, advocacy, familiarity and intimidation threats. To approach of this comment, the threats have been clarified as followed: