AUDITING

Auditing

Abstract

The paper tends to view the notions attached to the independence of the auditing along with the threats which can hinder the performance of the auditor whether internal or external. The paper will also identify a method which can strengthen the independence of the auditor.

Table of Contents

Abstracti

Introduction1

Discussion1

Auditors Independence1

Threats to Independence2

Protecting Auditor's Independence2

Conclusion3

Auditing

Introduction

Audit plays a very important role in serving the interest of organizations and people in general. It strengthens the accountability and reinforces trust and confidence in financial reporting. It also maintains a check on the performance of managers, who can exploit the resources of the firm using their skill. Scandals like Enron and WorldCom in the U.S. or Parmalat in Europe have increased the significance of Auditing. It is now imperative for organizations and managers to comply with accounting principles and regulations in order to avoid such scandals in future. IAA has developed a code of ethics for the auditors, which contains five basic principles of conducting an audit.

It includes objectivity, lack of conflict of interest, due diligence, lack of prejudice and professional secrecy. Auditing is a tool used for collecting data for decision making and the future activities of the organization.  The auditors should thoroughly investigate and analyze every problem from many angles, using interviews and employee reviews. The areas that may require enhanced audit work includes, Assessments at fair value, Impairments that are not temporary, Credit derivatives, Pensions and other post-employment, Claims, Stocks, Impairment of other assets, Deferred taxes and Disclosures.

In the business world, accounting is one of the most importance principles that every business professional must be knowledgeable of, regardless of his or her own field. This is mainly because the concepts of accounting can be applied to all the job specialization areas. Its importance have been promoted and understood in recent years and its usage in people's daily lives. Its concepts can be applied to all job specialties, its importance has been promoted in recent years, and it is useful in people's everyday lives. Thus, the role of the auditor in regard to the financial interests of the organizations tends to be identified as one of the significant factors. Therefore, in the context of the paper we will be shedding light on the Auditor's Independence through different perspectives in order to develop a better understanding of the subject.

Discussion

Auditors Independence

The term Auditor's Independence tends to be interpreted as the ability of the auditor to remain from and above of all the interests when it comes to auditing. However, the auditor here tends to be classified as the internal and external auditor. It is the duty of the auditor to remain free from influences whether internal or external. However, in the light of the research it would be safe to state that it becomes very tough for the internal auditor to remain free from the influences. Thus, the concept of the auditor's independence tends to be interpreted and linked to the external auditor.

However, the fact needs to be kept in mind that the independence of ...