CURRENT ISSUES IN AUDITING

Current Issues in Auditing

Current Issues in Auditing

Chapter 1: Introduction

Background

Auditing is one of most important aspects of financial institutions. Today, the auditing firms in Europe in general, and in Britain in particular are in a state of shock in the wake of recent media reports regarding the prevailing irregularities in the financial sector. The company's crisis can be explained by the influence of external factors, they can be the determining cause much of its success or failure without giving up their course on the influence of internal factors must also be taken into account. This approach can help guide the development of more accurate diagnoses for the company in crisis. A global treatment of the problems of accounting involves the study of the relationship between the company and its environment from a spatial perspective, the question that arises is how to characterise and describe the space within which the company exists.

The prevalent auditing crisis is an off-shoot of the Enron Scandal. The famous Enron Scandal triggered a need for the firms to reconsider their audit policies and practices. In the wake of this famous scandal, not only American, but the European organisations were also affected; forcing them to make drastic changes and introducing new accounting standards, aimed at catering to the ever-increasing needs and addressing other related issues as well.

Problem Statement

With the transition to a market economy, the European audit firms are facing the new challenges, which have led to the emergence of new accounting practices and standards. In contemporary times, when the establishment of economic ties between enterprises is often hampered by a lack of trust of partners to each other, especially acute need for reliable information, in which the interests of all parties without exception, the economic turnover irrespective of ownership (Alles, 2002,, 25).

Purpose of the Study

The purpose of the study is to discuss current issues facing the auditing practices. The promulgation of new laws has had a tremendous impact on the auditing firms thus forcing them to change their practices. This paper will present a detailed discussion on the current practices and laws governing the auditing profession. The advent of information technology has enabled easy access to confidential information of the firms. In this paper, I will also highlight the concerns and threats to an auditing firm's credibility (Alles, 2002, 25).

Objectives of the Study

The objectives of the study are to:

Highlight the current problems facing the auditing firms

Highlight the internal and external factors influencing the current financial turmoil (Alles, 2002, 25).

Discuss the role of International Accounting Standards Board, (IASB) in addressing the prevalent issues (Alles, 2002, 25).

Enumerate the role of auditing firms in implementing the provisions of IASB

Describe various measures to improve the current auditing practices

Significance of the Study

The significance of this study is evident from the fact that there are only few research studies that have focused on addressing the fraudulent practices in the auditing profession. There exist a number of financial standards, laws and regulations, but they are not being implemented in their true ...