Auditor Independence: A Vital Essay In Auditing Practices.

Introducation

How To The Developed In Relation Providing Relevant?

Auditors plays a very vital role in evaluating the actual position of the of the company in relation with both financial as well as non financial aspects. All the books of the company are being evaluated by the auditors. There are two types of auditors who indulge in the auditing practices. These two types of auditors are internal auditors and external auditors. Internal auditors are the auditors which are available in the company and are being paid by the company so as to provide audit reports of the same. On the other hand external auditors are the auditor’s team who comes to the organization for auditing it’s financial as well as non financial aspects and evaluate all set of information related with the same. External auditors could also organize surprise audit to ensure that the quality of the product manufactured by the organization and the services availed to the customers are meeting the standards. As these auditors do very crucial tasks hence it is required that their independence should be focused upon. It is being studied that auditors independence is being affected with various processes which are required to be evaluated so as to provide effective set of services to the same and to ensure that proper set of independence should be availed to them which could help them in remaining motivated to work in an effective way in near future.

Brief History of Auditor Independence

The auditing profession is a profession which is being organized around the central ethical conflict Client hires the auditor and pays the fees for the work done by the same but it is required that the in this process independence should be provided to the auditors which adheres to the professionals covenant with the society so that the audit could be completed in the interest of the public (Mayhew, Schatzberg, & Sevcik, 2013). Independence of the auditors is appeared to maintain with various number of detailed rules about the forbidden commercial and the familial relationship which is being developed between the auditor as well as client (Machado de Almeida, 2015). In the reality it is being evaluated that the independence of the auditor’s independence of making the judgment has been proved to be more difficult to be legislated.

The independence of the auditors is being regarded as a corner stone in the capital formation process by the U.S. Securities and Exchange Commission (SEC) (Johari, Mohd-Sanusi, & Chong, 2017). It is also being stated that independence is an important aspect attached with the auditors as it is required that proper set of freedom should be provided to them so that they could work according to their standards and ensure to prove appropriate set of information to the organizations for which audit is being processed by them (Ianniello, 2012).

Brief History of Auditor Independence

With the help of the studies it is being evaluated that the accountants are the gatekeepers of the financial market because they provide the assurance of maintaining the quality and integrity of the financial information (Carey, Monroe, & Shailer, 2014). The market of the capital becomes far less efficient when the accountants are not being provided appropriate set of support of the accountants in managing the activities of the same. It is necessary that all the standards should be maintained and the independence should be provided to the accountants so that they could avail effective set of information related with the financial system and provide appropriate support to financial market (Blay, & Geiger, 2012).

It is being intensified in the recent years that the professional accounting is under the considerable economic pressure. With the help of the market surveys it is being evaluated that the audit industry is not a growing industry in present scenario (Arya, & Glover, 2014). The industry is failing to provide appropriate profitability in providing the auditing services which is hindering in processing the auditing services in an effective way as the auditors are not being availed the effective as well as appropriate set of pay for indulging in the same process due to which they face issues in delivering the information to the market (Zerni, et. al., 2012).

Technology is one of the aspects which have a direct impact on the processes of auditing and financial management services. It is being evaluated that everything is being changed due to the up gradation of the information technology (Sulistyowati, & Supriyati, 2016). New IT services are changing everything present in the market. A great impact is being seen in the auditing industry due to the new IT processes of handling and maintaining the books as well as financial transactions of the company. A new post of the industrial paradigm of the wealth creation is being created due to the changes in the technology and these aspects are changing the ways in which the people prefer to perform the tasks and do their jobs of maintaining the track records of all the financial as well as non financial statements of the company (Seetharaman, Moorthy, & Saravanan, 2008).

Evaluating the growth in the crisis it is being embarked by AICPA to set the initiatives which will help in conceptualizing the future of the financial reporting system as well as auditing. In 1991 the Special Committee on the Financial Reporting was formed in order to address all the concerns related with the relevance as well as usefulness of the business reporting (Roy, 2015).

Body of the Essay

There were certain set of decisions which were being taken by the committee in relation with providing support to the auditor’s interest and helping them to process the work related with providing auditing services (Reiter, & Williams, 2014). These aspects will help the auditors in evaluating all set of frauds; assurance will be made that proper independence as well as objectivity of the independent auditors. In this committee decisions related with the discourage unwarranted litigation which will inhibit the innovation and will be undermining the professional abilities which are to be met which involves the financial reporting needs and will help in strengthening the audit disciplinary system (Plender, & Plender, 2007).

The charge is being taken by ISB to develop the conceptual framework for the independence to serve as the foundation of the development of the standards which are principle based (Oladipupo, & Izedonmi, 2013). Independence of the auditors was like a battle which was launched in October 1977 when the initial meeting of IS was held with AICPA in which White Paper proposal for the independence issues was provided. White Paper Independence proposal was provided so as to review the independence concept which was proposed in which rejection for the same was recommended as it was against the standards of the auditing concept. It was also being reviewed that each firm will have to develop the independence code and should be reviewed by ISB (Mayhew, Schatzberg, & Sevcik, 2013). There were certain set of questions which were observed whether the ISB will succeed in making the dramatic progress.

It was being evaluated that whether the Independence Standards Board will succeed in providing the breakthrough in the approach of auditor’s independence (Machado de Almeida, 2015). Various essential decisions in relation with the break with the tradition and the old ways of thinking that certain changes should be availed in the traditional processes and proper set of support should be availed to the auditors in making the decisions in relation with the auditing processes. Independence is really a one of the biggest matter of concern in the auditing process, in which ISC is taking an appropriate set of initiatives so as to provide relevant set of support to the auditors with the help of which auditors are being availed the support system for the independence of the same (Johari, Mohd-Sanusi, & Chong, 2017). It is required that the auditors should be provided the independence so that they could develop effective auditing and could gather relevant set of information related with the financial statements of the company and help in maintaining the decorum of the market

Recent Developments

Although technology is playing a very vital role in tracking and maintaining the information related with financial data and controlling the financial activities in the market (Ianniello, 2012). It is also being evaluated that more accuracy as well as fast services are being availed by the technology but it is required that the auditors should be provided the opportunity to analyze the data related with company because auditors are the people who prefer to avail well detailed analysis of the financial statements with the effect of which a path to develop the strategies could be availed to the organization so as to move on the path of success as well as sustainability with the effect of which organizations could sustain and succeed to gain the financial benefits (Carey, Monroe, & Shailer, 2014).

It is being evaluated that Independence is an abstract concept which is difficult to define in both general as well as in the particular state to the accountants who are certified (Blay, & Geiger, 2012). Essentially to gain the independence it is required that the auditors should ensure to provide the services with honesty, integrity, courage, and character. In simple terms it could be said that the independence could be availed to the auditors if they will follow all the instructions and provide the better set of services to the people for whom they are providing the auditing services (Arya, & Glover, 2014).

Conclusion

There are varieties of questions which have arisen by understanding the recent controversies which are related with the independence of the auditors. One of the question is the is the economic based concept related with the independence of the auditors is an economic imperative or it is the process which represent the death of the profession. Another question which arises is whether the profession will help in the survival of realignment of the attest, assurance and advisory function in present dynamic as well as global environment. It could be suggested that inadequate metaphor for the independence are partially to blame the profession which the lacks the progress of the process of the independence principles of the auditors. It could be concluded that the auditors should get proper set of support to remain independent and should get freedom to ensure that they could process their work in an effective way and should avail appropriate set of services to the companies for which they are indulged in the auditing processes.

References

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