Sunday, July 28, 2019
Auditing,(True and Fair view and Independence) Essay
Auditing,(True and Fair view and Independence) - Essay Example However, Dean and Clarke (2007) have declared the truth, fairness and independence to be near impossibility due to ââ¬Å"Faulty foundations of accountingâ⬠. An auditorââ¬â¢s selected procedures to conduct audit depends upon the auditorââ¬â¢s judgment including the assessment of risks of material misstatement. In making those risk assessments the auditor considers internal controls relevant to the entityââ¬â¢s preparation of financial statements that give a true and fair view of the accounts, he also evaluates the appropriateness of the accounting policies and procedures. Hence, an experienced auditor can even give opinion on the ââ¬Å"faulty foundations of accountingâ⬠(Dean and Clarke, 2007) through careful selection of procedures of audit. The objective of accounting remains to present, statements not for accounting only, but also to satisfy the auditorââ¬â¢s judgment which stretches beyond the books, since accounting leads to accountability only when audito r goes through it. What constitutes ââ¬Å"true and fairâ⬠by the auditor is being widely discussed criticized, and explored equally by the governments and the corporate sector. Auditors can never be sure that their opinion presents true and fair view of the financial statements( Christopher J. ... on (2010) have taken pure philosophical aspect of TFV and discussed the ââ¬Å"ethical discretionâ⬠that gives him ââ¬Å"dramatic ethical roleâ⬠able to either build or completely ruin the ââ¬Å"trustâ⬠of the company under audit. Their conclusion again leads into interlinking the pure morality to be guide through some laid down principles and procedures of accounting. To give ââ¬Å"moral weightâ⬠, an auditor has toâ⬠show the desirable resultsâ⬠(Campbell and Houghton, 2010), desirable for the stakeholders in general, though the stakeholders may vary from the employees of the company to the shareholders. Thus, claiming the entire morality for TFV in auditing revolves around setting standards and developing systems to ensure TFV. The role of TFV in auditing thus becomes pivotal and the objective of the TFV should be to give an opinion about the assertion of the management, for the shareholders, the strength of the financial position, its standing in t he market so as to lure potential buyers to invest on ââ¬Å"economically informed basisâ⬠(Campbell & Houghton, 2001). ââ¬Å"The Immediate role of audit independence is to serve the auditâ⬠the prime objective of audit independence is to ââ¬Å"improve the cost effectiveness of capital marketâ⬠(Jacobson, Peter D, 1998). Independence is ââ¬Å"fundamental to the reliability of auditorââ¬â¢s reportâ⬠(Ramsay, 2001). An ââ¬Å"objective and disinterestedâ⬠(Ramsay,2001) assessment of the financial assertion is said to be the foundation of the independence of the auditors, for effective corporate governance, the cost effectiveness of a business, for investorââ¬â¢s confidence, and particularly in wake of recent corporate failures. There are some key ways an auditor can make sure that they are perceived to be independent. Ramsay identifies these as
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment