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What is the nature of Auditor independence? What is the nature of Auditor scepticism?
This is a report to show out what the the nature of Auditor independence and the nature of Auditor scepticism. Source of this report from twelve article which six article for Auditor Independence, the other six article for auditor scepticism.
Base on those article, it have the purpose to present & analysis the recent history, criticism and development on auditor independence and auditor scepticism.
Let's talk about auditor independence first. Independence is act as middle between government and company. Every year, company should pay profit tax to government, so, company should pay profit tax to government, so , auditor required to carry out their work be integrity and objective manner. Company should reliable on internal auditor for check financial report in serious attitude, others, external auditor should check and represent to company for government.
In Audit, it needs the independence and the independent spirit externally in the ethics rules 290 of independent concept. The mind condition, allows a conclusion expression to affect, but uncompromising, allows individual specialized judgment conduct to be honest and movement objectivity and specialized suspicion. About independent outward appearance. The evasion fact and the situation are so important, reasonable and knows the circumstances of the matter the third party, the haveing knowledge's all related information, applies including each kind of safeguard, works out the company either a member the reason guaranteed that the team the integrity, the objectivity or the specialized suspicion have received the violation.
Audit independent importance. This is thought generally has two type audit independent reality and the sensation independence. (Firht1980. Shockley, in 1981 peduncle and so on. And so on. , 1999), consciousness concept is one kind of independent auditing theory cornerstone
Regardless of this research will be different in the present law and the political background with the US and other research, is unknown, the claim influence, the cultural difference also proves the Ming dynasty printed books research to the business dealing and sensation national culture difference Hong Kong in the Asian and Pacific area and the UK and US business environment (Bateer and Psaros,2000: Meguid and so on. , 2001). Therefore, this research will consider the measurable quantity class to accept Si for the first time, the competition, the official rank auditor auditor and the type, in respect independent question, because it relates Hong Kong auditors to make the law after environment the safely. This research has made the contribution, the literature in the Asian and Pacific area, may assist the supervision organization and the specialized organization formulation policy and the criterion independent question.
In Hong Kong, has the compulsory verification standard at present, forbids the NAS customer which provides or monitors other consciousness risk familiar the independence. Although the beforehand research has carried on the US (Bartlett, in 1993: Jenkins and Krawczyk,2001: DeFond, 2002: Gull et al. , in 2007), the nation cultural difference possibly conforms to this kind of pattern in Hong Kong. The investigation independent question, in local establishes the suggestion is by the peduncle and so on. 1999. In this aspect's opinion, Hong Kong auditors have the possibility to provide the precious opinion. In addition, after in 1997 transferÂ ofÂ sovereignty, from British Tudor the Chinese government, Hong Kong has become Chinese special administrative region. Hong Kong is at present the use "one country two systems: Operation, according to this rule formulation basic law, the Chinese government since 1997.
In the auditing theory and the audit practice (Bakaer and so on. , 2005; Gull et al. , 2007). As a result of Enron's collapse, in the US, profession and supervision organization, like US Securities trading Committee already more attention this dispute topic. The existence question and auditor's independence and provides NAS receives the strict examination day by day, the media and the public to audits the profession. Audit independent lacking will be a support factor it is said that compares in the near future business failure and the world's the enterprise scandal, if safely, the world will pass, in the US and sunlight; HH and in an Australia's telephone, and in Italian Pamalate.
Arens and so on. in 1999 defined for "the independent audit "the achievement has viewpoint without bias and without favor in the execution audit testing, the appraisal result and the signing and issuing report of audit. Including independent complete quality, objectivity and fairness. At discussion's foundation auditor's independent concept, Pany and Reckers (1983) stressed that this concept is stems from the existence closely the reason audit itself. They say, the reason (i.e. independent audit) - the major reason has public accounting truly for the exterior auditor's work the specialty, comes from needs the reliable financial information.
Two type auditor's independence; Actual and feels independence. In fact independent (or actual independence) may define as auditor's point of view, he or she have ability to make objective and the fair audit decision (Dykxhoorn and sinning, in 1982). What it basically refers to is in the point of view auditor specialized objectivity (Juer and green jade, 1992), on the other hand, the independent outward appearance (either consciousness independence), is refers to the public or other people's view auditor's independence. This concept's independence (i.e. thought that audit independence white) is one kind to the auditing theory cornerstone and the essential condition audit practice. Has relied on externally since the independence the sensation user financial reporting. Therefore, my experience concept (Booth Feng colbe and Lutter,1977:dykxhoorn and sinning, in 1981)
The auditor holds the importance which the suspicion grows day by day Close the end of the year's the 90s publication's two paper setting up a business quite takes the specialized suspicion: ' Cheat and audit: The system chooses society' Aggressiveness receives Management' . In case ' Cheat and audit: Choice for social ' , the specialized suspicion is determined for the important primary personnel, particularly anyone, because they contact the client management and they participation directly inspect and test the transaction, has the best opportunity recognition suspicious situation. In ' The positive earnings manage ' The description opportunity, the setting up a business company has misleading the capital market estimated to their performance and profit ability bias accountant. Although realizes to the difficulty facing the auditors, in determines and deals with in this kind of situation, setting up a business encourages the auditors even more to suspect that estimated in audit accountant. Along with the result setting up a business this aspect's work requirement, the related application suspicion is inserted was expanded to the audit criteria and related standard about the audit budget to includes the verification the fair value.. Accountant stipulated the change, specially increases the estimate to participate in the establishment financial reporting according to the international financial report criterion, this means that the suspicion entire audit troop has become the more important audit quality. Suspected that the principle is the need auditors must manage related challenges accountant to estimate whether suitably, to challenge the self-full suitable audit evidence whether to have obtained supports these estimates. This involves the audit to appraise frequently whether the supposition basic estimate as if does make sense. The appraisal rational supposition, is unable to carry on the suitable degree suspicion and the challenge. The US Asia proposed worrying with suspected that the auditor insufficient whole world main leadership the audit company, and tries to formulate planning for action these companies to plan how to solve the basic reason. Audits accountant to estimate that budgets including fair value accountant, as well as disclosed related: Auditor suspicion: Enhanced 9 suspicion principle importance in reality For many years, the discipline investigation, the fair life insurance association, the London Group International, the independent insurance, TransTec, Wicks and ERF the group had determined audit defeat. These measures including to rely on the example management negotiation, does not investigate the conflict the explanation and has not been able to obtain the appropriate third party to confirm that - this possibly indicated that the auditors have not obtained in these cases hold the suspicion fully. In the US, the research indicated that has not been able to display a suitable level A deficiency's suspicion is discovered in 60% situations, the US Securities trading Committee proposed cheats the related motion to auditors. This conforms to US's survey result group audit validity. This group, this was a set by the US Securities trading Committee (SEC) in 1998, carried on the very thorough examination audit result big large-scale to audit firms.The group reiterated the important occupation suspects and pointed out: the audit criteria needs to provide the concept which how a better instruction does implement, the audit company should teach the specialized concept to hold the suspicion effectively, and â€§ the Accounting firm should formulate or expanded training face all levels of audit to the responsibility and the cheat examination procedure. These plans should stress that the interview skill and exercises specialized holds the suspicion, as well as test technology. Auditor suspicion: Enhanced The academic work summary also provided some targets, the auditors possibly did not have to hold the suspicion fully, although the people realized that majority of this was US's research, the result is not possibly suitable for the different audit work environment. Development and promotion auditors in Audit agency suspicion Suspected that the principle is an important element, the audit quality, and says for a long time in the intermediate stage, the audit defeat may the public audit office lawsuit and the reputation loss. Therefore the audit company has the policy and the procedure, is for the purpose of realizing the audit quality.However, what similarly is obvious is audits the place which the company quite takes seriously to retain their client base. The value customer service's plan and the relational company internal management takes a disadvantage factor possibly to auditors' suspicion, if the audit group believed that through demonstrated their risk has suspects ' Not happy customer. Specially possibly appears question, if the suspicion result delayed has completed the audit. The audit timetable usually is agrees beforehand, if particularly the entity were to be listed already the date which agreed that according to announced its result. Because delayed the auditor who created to pursue the extra inquiry to cause the audit not already to complete the agreement date to be possible the question, if auditors' attention, were proven specially that did not have the basis. In addition, the application suspicion may also immediate danger short-term profit ability. The audit expense majority is in the time foundation which agrees beforehand estimated that extra charge difference after plan verification discusses completes. The preliminary estimate is in the foundation which prepares to collect fees, this entity will control by the proof will be the effective operation, moreover several other questions will be promulgated. Audits the market competition to be intense, this expense estimated that not usually includes to handles the sharp-edged accident. After negotiating the extra expense, the audit completes has the adverse effect client side relations. Has the possibility in such environment is the cause, the audit team observes this plan strictly. Who maintained this plan is also feasible strategy is the primary personnel the operating time was already long, possibly did not want to work, even if longer16.Two special domains, very possible are the related development and the promotion auditors' suspicion are: (one) advertises for, training and the drive/reward procedure and (two) audits the method.