As the nature and structure of companies has changed over the years, so has the portfolio of services that auditors provide. Today, while companies still rely on an auditing firm’s classic audit services, they use the same firms for attestation services and increasingly for financial and non-financial assurance services as well. The changing scope dovetails with a rise in the outsourcing of non-core activities and a heightened need for management to understand and drive continuous improvement through their business processes. These services are sought from a variety of sources and are primarily used to aid in the decision-making ability of both management and those outside the company, who might be considering putting their money at risk by associating it with the company in question. As you will see, each of these services plays a different, yet important, role in helping manage a company’s financial health.
Example of Service
The purpose of auditing services is to provide reasonable assurance that a company’s financial information is free of material misstatement (Boynton & Johnson, 2006). This is accomplished through obtaining and evaluating historical financial statements and reviewing internal controls. An example of an audit is a CPA testing transactions and account balances through random sampling to ensure the information that is compiled into various financial statements is correct. Attestation services are written communications issued by CPA firms. It is an overall conclusion in regards to financial statements and a company’s compliance with laws and regulations (Boynton & Johnson, 2006). An example of an attest service is a CPA writing a review after giving a negative assurance. Assurances services are independe...
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...e 1). Attest Engagements. Retrieved March 13, 2014, from http://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AT-00101.pdf
Boynton, W. C., & Johnson, R. N. (2006). Modern auditing: Assurance services and the integrity of financial reporting. (8th ed.). Hoboken, NJ: Wiley.
Bushman, M. (2007, December 18). Accounting and Auditing: An Overview of Attestation Services - Yahoo Voices - voices.yahoo.com. Retrieved from http://voices.yahoo.com/accounting-auditing-overview-attestation-727395.html
Statement on Auditing Standards. (2013, June). AU-C Section 200 *: Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance With Generally Accepted Auditing Standards. n.d., n.d., United States. Retrieved March 13, 2014, from http://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AU-C-00200.pdf
With every business activity come opportunities for fraudulent behavior which leads to a greater demand for auditors with unscathed ethics. Nowadays, auditors are faced with a multitude of ethical issues, and it is even more problematic when the auditors fail to adhere to the standards of professional conducts as prescribed by the American Institute of Certified Public Accountants (AICPA). The objective of this paper is to analyze the auditors’ compliance with the code of professional conduct in the way it relates to the effectiveness of their audits.
Arens, Alvin A., Elder, Randall J., and Beasley, Mark S. (2012). Auditing and Assurance Services:
In order to ensure an organization’s financial order, auditors with international standards are a vital part. However, very few auditing companies exist in Afghanistan that can provide auditing services in compliance with international accounting standards. Fortunately, ACC is one of those few auditing firms that can confidently say that its auditing services are in the highe...
Gray, Iain and Stuart Manson. The Audit Process: Principles, Practice and Cases. London: Thomson Learning, 2008. Print.
Whittington, Ray & Pany, Kurt (2014). Principles of Auditing & Other Assurance Services, 19th Edition (pp. 189). McGraw-Hill.
Auditing is used to enhance the degree of confidence that users of financial statements have in those statements. This is achieved through gathering sufficient evidence to come to a conclusion on whether the financial statements are prepared “in all material respects, in accordance with the applicable financial reporting framework”. (IFAC, 2013). This usually refers to how true and fair the statements are when looking at the financial position of the company at the end of the period.
Investing and lending public: These individuals and entities rely on independent auditors to carry out their “public watchdog” function rigorously, including reporting honestly and candidly on their clients’ financial statements. The integrity and efficiency of our nation’s capital markets are undermined when auditors do not fulfill their professional responsibilities. This will cause these individuals lose faith on the auditing work and might not cooperate with auditors anymore.
Even though before this time period a company’s auditors were required to maintain an independent view since they were suppose to act as a protector to all end users it was not always the case. An environment was created with a Utilitarian approach that said company’s can offer package services that offer consulting services why at the same time audit the company’s financial statements. But when issue arose it became difficult to jeopardize the superior revenue that was obtained through consulting
Marx ,B etail(2004) asserts that the audit quality is the basis of the credibility of the financial statements.According to De Angelo (1991) audit quality depends on the probability of auditor s ‘discovery of the unbiased truthful report of material errors, emission and misrepresentations from the clients’ financial statements. This ability of a truthful, unbiased report depends on the auditor s' professional conduct with the client, which are based on the objectivity of the auditor, such as professionalism and conflict of interest says Adenyi S and Mieseigha E.G (2013).
The purpose of internal auditing and the professionals who provide internal auditing services according to the definition created by the Institute of Internal Auditors is to provide “an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.” Several guidelines and processes have been created to aid an internal auditor in providing the objective, value adding services they’re supposed to. The International Professional Practice Framework is the compass that provides internal auditors
Rittenberg, Larry, Bradley Schwieger, and Karla Johnstone. Auditing. 6th ed. Mason: Thomas South-Western, 2005. 10-40.
Audit is a process to evaluate and review the accounts and financial statement objectively. We can divide it into internal auditors and external auditors. Internal auditors have a inner knowledge of business process. Auditor has access to the much confidential information and all levels of management. But they may lose their judgement and they are not acceptable by the shareholder. “The overall objective of the external auditors is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to report on the financial statements in acco...
Auditors audit, rather than recreate, the records of clients. As such, trust is an inherent factor of the audit process (Schaub, 1996). An auditor also needs the information provided by management to be truthful to carry out the audit. Therefore, an auditor must trust the members of management to provide truthful information (Rennie, 2010). Auditors must also provide an overall evaluation of the client’s trustworthiness when planning the audit and evaluating the client’s control environment (Schaub, 1996). However, “The Independence Standards Board identifies auditors’ familiarity with the client as one of five threats to auditor independence. To foster auditor independence and objectivity, the Sarbanes-Oxley Act of 2002 bans auditors
The fundamental duty of an external financial auditor is to form and express an opinion on whether the reporting entity’s financial statements are prepared in accordance with the relevant financial reporting framework. In discharging this duty, the auditor must exercise “reasonable skill, care and caution” (Lopes, J. in Kingston Cotton Mill Co 1896) as reflected in current legal and professional requirements.
The evolution of auditing is a complicated history that has always been changing through historical events. Auditing always changed to meet the needs of the business environment of that day. Auditing has been around since the beginning of human civilization, focusing mainly, at first, on finding efraud. As the United States grew, the business world grew, and auditing began to play more important roles. In the late 1800’s and early 1900’s, people began to invest money into large corporations. The Stock Market crash of 1929 and various scandals made auditors realize that their roles in society were very important. Scandals and stock market crashes made auditors aware of deficiencies in auditing, and the auditing community was always quick to fix those deficiencies. The auditors’ job became more difficult as the accounting principles changed, and became easier with the use of internal controls. These controls introduced the need for testing; not an in-depth detailed audit. Auditing jobs would have to change to meet the changing business world. The invention of computers impacted the auditors’ world by making their job at times easier and at times making their job more difficult. Finally, the auditors’ job of certifying and testing companies’ financial statements is the backbone of the business world.