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Essays on internal control in auditing
Internal audit as an effective internal control system
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Running Head: THE ROLE OF THE PUBLIC ACCOUNTANT IN THE 1
The Role of the Public Accountant in the American Economy
Simone Bowens
Saint Leo University
THE ROLE OF THE PUBLIC ACCOUNTANT IN THE AMERICAN 2
Independent certified public accountants (CPAs)/auditors performing auditing and attestation engagements play a very important role in the economy. Auditing services can assist businesses with (1) transparency, (2) ensuring they are following proper policies and procedures, (3) ensure internal controls are functioning properly and (4) detect fraud and errors. Auditors provide the necessary checks and balances.
In addition to the services above auditors can also attest to various other types of subject matters including financial forecast, compliance with laws and regulations, and advertising claims. The information they provide must be accurate, dependable and reliable (Whittington/Pany, 2012).
How the requestors of the information utilize the findings can have a negative or positive impact on our economy because these finding can affect (1) whether a bank will grant a business loan, (2) if investors will back a company, or (3) if the government is receiving a fair and reasonable price for goods and services, e.g.
You may be wondering about the various types of auditors. There are (1) Internal Auditors, (2) Government Accountability Office Auditors and (3) Internal Revenue Agents and (4) Defense Contract Audit Agency (DCAA) Auditor e.g. (Whittington/Pany, 2012).
Nearly every major corporation has an internal auditing section. The primary job of internal auditors is to investigate and appraise the effectiveness with which organizational units of the company are carrying out thei...
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...in their internal controls. The government utilizing the results you provided them and negotiating downward on a contract and saving hundreds of thousands of dollars and perhaps millions of dollars in some cases. You may also bring fraud to light, which could lead not only in possible jail time for the perpetrator, but it could result in saving employees’ pension plans or exposing faulty mortgage loans (referring to crisis such as the historic Enron and more recently, the mortgage crisis). The affects a ‘good’ auditor can have a business are endless which will trickles down to a positive impact on the economy.
THE ROLE OF THE PUBLIC ACCOUNTANT IN THE AMERICAN 10
REFERENCES
Whitting, O. Ray, Pany, Kurt: Principle of Auditing and Other Assurance Services
(18th ed.) . New York, NY: McGraw-Hill/Irwin
http://www.dcaa.mil/about_dcaa.html
Arens, Alvin A., Elder, Randall J., and Beasley, Mark S. (2012). Auditing and Assurance Services:
These methods include the structure of the CPA firm and the procedures established by the firm. The CPA firm follows its specific quality control procedures to help the firm meet auditing standards consistently on every audit engagement. Quality control policies and procedures should be documented by each CPA firm, and the procedures should focus on the size of the firm, the number of offices, and the nature of the practice. The quality control procedures that firms use should address six elements such as leadership responsibilities for quality within the firm, relevant ethical requirements, acceptance and continuation of clients, human resources, engagement performance, and monitoring. CPA firms must also be enrolled in an AICPA approved practice-monitoring program or peer review in order for other CPA firms to determine and report if its quality control system is in effect and
Krishan, G.V., & Wei, Y. (2012). Do small firms benefit from auditor attestation of internal control effectiveness? Auditing, 31(4), 115-137. doi:10.2308/ajpt-50238
If you do want to work for an accounting firm they would be public and private firms. A public firm does auditing, taxing, advisory, and consulting services. Examples of public firms would be The Big Four (Deloitte, PwC, Ernst & Young, and KPMG). A
Objectivity also needs to be evaluated to make sure the internal audit is reliable. The internal audit needs to be free of conflicting responsibilities as well
Inter assessment of a firm involves items such as a mission statement, vision, and core values that drive a firm internally to achieve its goal. It also involves internal audit to allow an organization to set its long-term objectives, generate, evaluate and select strategies, implement these policies and finally, measure its performance to ensure that it meets its original goals. Mayo Clinic has drafted its mission statement, vision, stated its core functions clearly and carries out internal performance audit regularly. This practice has allowed the clinic staff to understand their roles and impact it will create on the performance of the institution. In management, workers who understand their roles perform better, th...
What is a CPA or Certified Public Accountant? CPA are state licensed or certified. They analyze financial data an prepare reports for individuals or organizations in order to describe the financial soundness of the business operations. These reports are used for management decision making. The requirements for a CPA are to has at least a bachelor’s
Internal Audit Department To monitor the implementation of internal procedures, policies, internal control system and report any violations. Detection and control of financial risk and fraud.
...e financial reports and statements are correct. This auditing will be conducted by auditing department of the organization, even may be done by an independent auditor who is not part of the organization, and sometimes public officials are elected. In case of unmatched consequences the organization need to give explanation on the misrepresentation of wrong statements. Auditors purpose is then to ensure that the misrepresentations are corrected, then maintain accurate, reliable financial documents and statements.
An auditor is an accountant that is hired to review a company’s financial statements and give an opinion on them. There are different kinds of auditor such as internal, external, and governmental, but their jobs are relatively the same. They are used to ensure that a company or organization is maintaining accurate and honest financial records so that others can use them with confidence.
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.
"Accountants and Auditors." U.S. Bureau of Labor Statistics. U.S. Department Of Labor, 18 Dec. 2007. Web. 20 Nov. 2009. .
Are Auditors Becoming Too Cozy With Their Clients? By: Briloff, Abraham J.. Business & Society Review (00453609), Summer85, Issue 54
Overall, the company is having ineffective controls regarding different departments and in the whole organization. An effective internal audit department should be established within the organization which should test the effectiveness of these controls on regular basis and make it sure that all controls are working effectively and efficiently with the different departments of the organization. Also the Internal auditor should implement the most effective processes and measures to prevent and detect the fraud, corruption and non compliance with the laws and regulations in the organization. Establishment of internal audit committee would be helpful in this regard which comprises of executive and non executive directors.
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...