by FATEH BOUCHENE , institut d'emission , banque centrale d'algerie
4 years ago
First and foremost, auditors must appear independent in order for users of financial information to have confidence in the opinion given and the quality of the information audited. In this perspective, it is not important to ask what an honest and honest auditor is. The fundamental problem is to ascertain whether the auditor occupies a position in which he can resist the pressure of the leaders so as not to compromise his independence. Thus all the efforts of legislators, standardizers and professional bodies are directly linked to the construction of a clear picture of the independence of the auditor [Lee, 1993]. The bottom line is the users' perceptions of the auditor's independence.
by
Frank Mwansa , ACCOUNTING LECTURER , FREELANCER
4 years ago
In order that a member 's audit report is if value auditors must have Independence of mind and independence in appearance. These principles of both being and being seen to to be independent are at the centre of the role played by Independence in auditing. Independence of the auditor is a matter of public confidence in the audit process.
The auditor should be independent from the client company, so that the audit opinion will not be influenced by any relationship between them. The auditors are expected to give an unbiased and honest professional opinion on the financial statements to the shareholders.
Doubts are sometimes expressed regarding the independence of external auditors. It can be argued that unless suitable corporate governance measures are in place, a firm of auditors may reach audit opinions and judgments that are heavily influenced by the wish to maintain good relations with the a client company. If this happens, the auditors can no longer be said to be independent and the shareholders cannot rely on their opinion.
Accounting firms sometimes engage set audit fees at less than the market rate and make up for the deficit by providing non-audit services, such as management consultancy and tax advice. As a result, some audit firms have commercial interests to protect too. This raises concerns that the auditor's interests to protect shareholders of a company and his commercial interests may conflict with each other.
The external auditor must be independent of the company and its board of directors, and may not be a partner or agent of one of the founders or a member of its board of directors or close to the fourth degree.
During the period of his / her audit, the external auditor shall be prohibited from carrying out any additional technical, administrative or advisory services or works related to his work which may affect his decisions and independence.
Quality Measurement Factors for the External Auditor: I. Factors Associated with the Audit Office: - The size of the office - the number of professionals in the office and the professional certificates obtained positive if the size of the office is large and negative if the size of the office is small.- The volume of work - the number of audits and the annual revenue of the office positive if the size of the number and value is large.- Period of contract of references with the client - the length of the period of engagement with the client positive with short period and negative with the length of the period.- Office participation in the quality control program organized by the professional organizations - the office is a participant and not a participant in the quality control program - positive if the office is organized and negative if the office is not organized- Cases brought against the office - The number of lawsuits filed against the office - Positive if the number is small and negative if the number is large.- The existence of a department or system of quality control - the presence or absence of a department or a positive system in the case of a section and negative in the absence of a department.- The availability of continuous education and training for the employees of the office Participation or non-participation in education and training programs - Positive in the case of participation and negative in the case of non-participation.- The extent of commitment to professional behavior - The number of cases of violations of professional behavior, which have been enumerated both from within the office or by professional organizations - positive the fewer the number of violations and the more negative the number of violations.- The extent of specialization in a particular field - The number of industries that the Office participates in reviewing the lower the number of industries the higher the quality.- The extent of the experience of the staff in the office according to the years of experience - positive, the more experience and negative with the lack of experience. Second Factors related to the customer [the entity under review]: - Periodic change of references - change / non-change - positive whenever there is a periodic change during a reasonable and negative period in case of continuity for long periods.- The extent of development of accounting systems - The development / non-continuity of accounting systems - Positive impact in the case of continuous development and negative in the case of non-development. Factors Related to the Review Process: - The extent of compliance with the accepted auditing standards - the number of observations or irregularities recorded by the audit office of the employees or recorded by the professional organizations to the audit office - the greater the number had a negative impact on the quality of the audit.- Planning the audit work sufficiently - The extent to which the main partner or auditor to develop a plan for each review in each period - a positive impact in the case of development of the plan and develop each year.- Adequacy of working papers to document audit procedures - Adequacy / insufficiency of work papers - Positive impact in case of adequacy of working papers.- The adequacy of the examination and evaluation of the work of assistants - the presence / absence of examination and evaluation of the work assistants - a positive impact in the case of examination and evaluation of the work of assistants.- The extent to which the use of modern technical means in the completion of the review work - the use / non-use of modern technology - a positive impact in the case of the use of modern technology.- The extent to which a review committee - the presence / absence of an audit committee - has a positive impact in the case of an independent review committee.- Obtain sufficient evidence - Evidence adequacy - Positive impact in case of adequate access.- Adequate time to complete audit work satisfactorily - Time / insufficient - Positive impact if time is sufficient and negative if time is insufficient.- Fit fee with required voltage - Fit / not fit with voltage - Positive effect if the fee fit the required voltage.- The extent to which professional performance monitoring programs are under the supervision of professional organizations - active professional organizations - are not active - have a positive impact in the case of active professional organizations interested in developing the profession.- The effectiveness of professional organizations in training and continuous education of auditors - Effective / ineffective organizations - Positive impact in the case of effective organizations.- The extent to which auditors are subject to adequate sanctions in the event of default - the presence / absence of adequate penalties - a positive impact in the case of adequate penalties. Fourth: Factors related to users of financial statements: - The extent to which users rely on the financial statements in making different decisions - Percentage of users who rely on financial statements - Positive if the ratio is large and negative if the percentage is small.- Leverage - ratio of creditors to total assets - the higher the ratio the higher the demand for high quality.- Number of owners - Increase in the number of shareholders Decreased the percentage of owners of at least 5% of the shares of the company - the greater the number of owners increased the demand for high quality.- Extent of dependence on the stock market to finance projects - The percentage of financing through shares and bonds that are offered for public subscription to the total assets of companies - the greater the percentage the greater the demand for audit quality.
الترجمة من Google للمؤسسات:مجموعة أدوات المترجممترجم مواقع الويب
He can make unbiased opinion on the financial statements of an organisations.
by Mohd Tarmizi , Sarbanes-Oxley [SOX] Testing & Management Self-Assessment [MSA] Reporting Analyst. , IBM CAPITAL MALAYSIA SDN BHD, Kuala Lumpur Center of Excellence.
4
years ago
Simple. To avoid any conflict of interest in giving the professional opinion so the result would not be biased to and influenced by any related parties.
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