StudentShare solutions
Triangle menu

Auditing and Accouning Ethics - Essay Example

Not dowloaded yet

Extract of sample
Auditing and Accouning Ethics

The auditors should be independent members with suitable accounting and financial expertise, to appraise the policies underlying the financial reports and to assess their validity. Auditors should ask pertinent questions to clearly understand every transaction, allegation or investigation that has happened. An audit aims to draw out the essence and truth from every answer and helps to examine the controls and processes, employed by the company, in any complex transaction that may be out of the normal process of controls.
The requirement of an annual audit prompts companies to establish an effective compliance programme, which will have anti-fraud controls, to detect fraud, and proper investigation conducted, if fraud is detected. An audit is like a tool that ensures that financial reports would be accurately created and updated, internal control system would be in place and proper reporting and investigation of improper actions would be made.
Most corporate fraud cases have originated at the highest managerial level. The multi-billion dollar cases of fraud involving WorldCom, Enron and Tyco International, were all results of the fraudulent activities of the respective chief executives of the companies. Tyco International's CEO, Dennis Kozlowski, was charged with misappropriating 400 million USD of company money on an extravagant lifestyle and personal expenditure. Similarly, the cofounder and CEO of telecom giant WorldCom, Bernie Ebbers, got convicted for a fraud of 11 billion USD, in 2005. Kenneth Lay, CEO of Enron, was charged with a corporate fraud that ultimately resulted in the collapse of the company.
However, in spite of strict laws that have been instituted to prevent huge losses to shareholders, employees and investors, corporate fraud is still alive. The Sarbanes-Oxley Act of 2002 and other measures that resulted from major corporate fraud cases has made it mandatory for companies to have strict internal controls and has also established a federal board that will oversee the work of the auditors. The act also requires the top executives of a company to sign the financial statements, thus making them personally responsible, in case discrepancies were detected later on.

One of the major corporate fraud incidents to have rocked the world in recent years was that of Satyam Computers. On January 7, 2008, the fourth largest software company that had headed India's IT boom, collapsed with Mr. Ramalinga Raju, the Chairman, conceding that he had tampered with the company accounts. Mr. Raju accepted that he alone was responsible for the fraud, estimated to be about 80,000 million INR. The cash and bank balance of the company existed only on paper.
Now comes the important question about the role of the auditors. In this case, PricewaterhouseCoopers, the international firm of auditors, was the auditors for Satyam Computers Services Limited. A fraud of such an extent cannot be possible without the knowledge of PwC. The books of account was forged, by none other than then company chairman, and endorsed by the auditing firm. By all accounts, PwC had to certify these forged account ...Show more

Summary

A company or an organisation, whether for profit or not-for-profit, will have certain amount of financial transactions and property to its name. It will also have certain dues and owes, from other organizations/individuals/government and to other organizations/individuals/government, respectively; all these information concerning the organisation should be properly documented in the financial report and should reflect the accurate financial position of the company on a particular date…
Author : darion57
Auditing and Accouning Ethics essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Auditing and Accouning Ethics"
with a personal 20% discount.
Grab the best paper

Related Essays

Auditing & Accounting Ethics
During this period, a relatively small number of accounting firms could perform audits for a relatively large number of entities. Professional accountants and auditors could render reports on the financial performance of different entities and could work for different investor groups.
23 pages (5750 words) Essay
Auditing Ethics
For many years professional accounting associations effectively controlled the form of Auditor organizations through explicit, formal restrictions. Non-Auditor ownership of public accounting firms was prohibited and "holding out" or advertising as a Auditor was restricted to those employed by one of these firms.
12 pages (3000 words) Essay
Auditing and Accounting Ethics
Hayes, R., et al (2005) argued that a self-interest threat occurs when a member firm or member of the assurance team could benefit from a financial interest or other self-interest conflict with an assurance to client. Examples of circumstances that may create this threat include but are not limited to: a direct financial interest or material indirect financial interest in an assurance client; a loan or guarantee to or from an assurance client or any of its directors or officers; undue dependence on total fees from an assurance client; concern about the possibility of losing the engagement; having a close business relationship with an assurance client; potential employment with an assurance c
12 pages (3000 words) Essay
Auditing and Accounting Ethics
The factors include intimidation, self -interest and the like. The auditors opinion gives credence to the financial statements. The following paragraphs explain that independent auditors are the rule and not the exception (Snyder 2002). Many
12 pages (3000 words) Essay
Auditing and Accounting Ethics
In question 1 the different threats of independence as it is one of the most crucial characteristics of auditor. In question 2b, the ethical dilemma of the employee of a firm has been analysed with different point of view. In question 3 the liability of an auditor
10 pages (2500 words) Essay
Auditing & Accounting Ethics
Auditing is of different but here we are concerned with financial statement auditing. Basically the propose of financial audit is to extend a creditability to financial statements prepared by an
12 pages (3000 words) Essay
Auditing and Accouning Ethics
From this definition the basic understanding of the purpose of audit is that auditors verify the financial information companies prepare and provide reasonable assurance to the shareholders and other stakeholders that this financial information is free from material
11 pages (2750 words) Essay
Auditing and Accouning Ethics
ent, respectively; all these information concerning the organisation should be properly documented in the financial report and should reflect the accurate financial position of the company on a particular date. Organisations other than very small companies should have an annual
11 pages (2750 words) Essay
Auditing Practices, Professionalism, Ethics, And Standards
Although some experts have argued that auditing firms may still be able to legitimize their status by appealing to and incorporating professionalism in their practice, this is often difficult as they are often motivated to increase their profits and market niches just like other capitalist enterprises.
8 pages (2000 words) Essay
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation