Accounts and Auditing

Accounts and Auditing

What are the significant and pervasive audit deficiencies within accounting firms? Discuss. How can these deficiencies be rectified? Discuss.

The most significant shortcomings in the work of audit firms and individual auditors identified conducted inspections in 2009, and highlights the experts on audit activities in the following areas:

- The audit of the financial (accounting) statements;

- Preparation of the audit report;

- The independence and professional ethics.

An analysis of the results of inspections, as well as expert opinions can be considered typical of these deficiencies that require special attention by the audit firms and individual auditors and auditors. With regard to compliance with federal auditing standards in the conduct of the audit of the accounting (financial) statements, identified the following most significant drawbacks:

1) Lack of established procedures for resolving disputes, the development and documentation of consensus.

2) The absence of a lack of evidence or due interaction of auditors by changing the audit firm or an auditor change during the quest, which was engaged in another auditor.

3) Low quality of working documentation of the auditor, including the creation and storage of audit file;

4) Inadequate assessment of materiality;

5) The lack of inadequacy of audit procedures with respect to the applicability of the going concern entity.

6) The absence of documentary evidence of fact or the compliance by the entity of the Federal Law "On Combating Legalization (Laundering) of the Proceeds from Crime and Financing of Terrorism".

7) Lack or absence of audit procedures to detect corruption.

8) Lack of measures for the implementation of internal quality audits, as well as evidence of a lack of specific procedures for internal quality audit;

9) Lack of policies and procedures governing the decision on the adoption of a new customer service or continuing to work with existing client;

10) The lack of policies and procedures in place to ensure that staff of the audit firm has the knowledge, experience and observe ethical standards, the lack of procedures for assessing the skills and expertise of employees; (Campbell & Shiller, 1988).

The importance of the auditing has always been very high in most of the organizations. Audits in business are very important, because without practice management of an audit does not have full assurance that recorded economic data really are true and reliable. Defining the audit is quite reasonable, the actual situation of the company. An audit also assesses the efficiency and effectiveness with which they develop the administrative and compliance of plans and management guidelines. It is common for financial institutions, when they requested loans, ask the applicant company, the audited financial statements, i.e., to be endorsed with the signature of a CPA. An audit can assess, for example, the financial statements as a whole or a part of them, the proper use of human resources, the use of materials and equipment and distribution, etc. Some of the factors contribute towards management for proper decision-making (Chen, Richard & Stephen, 1986).

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