Audit Assignment - Abdul Rauf 07419243 INDEPENDENCE AND THE...

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Abdul Rauf 07419243 INDEPENDENCE AND THE PROVISION OF OTHER NON- ASSURANCE SERVICES TO ASSURANCE CLIENTS Accountancy and audit firms are constantly looking to broaden the range of services provided to their client companies. This provides additional lucrative earnings, strengthens their relationship with their clients and helps to further secure their position in the market place. Clients are often seeking to achieve cost savings and efficiencies by obtaining a comprehensive range of services from the same firm. However, when providing assurance services (such as external audit) the fundamental principle of ‘independence’ is of paramount importance. The provision of other services may pose significant threats such that independence is not achieved. Professional requirements in the form of ethical codes of conduct and standards are intended to secure independence by providing frameworks that must be observed by professional accountants in the conduct of their professional client relationships and service activities. Although in recent years ethical codes and standards have been strengthened to ensure that assurance providers are properly independent many commentators believe that the requirements do not go far enough. For example, the recent announcement of KPMG to provide an ‘extended assurance’ service to client companies comprising of both an external and an internal audit service is of particular concern. REQUIREMENTS: You are required to write an essay that explains and critically discusses the issue of auditor independence with regard to the provision of other services. As a minimum your answer should cover the following matters: b An explanation and critical discussion of the meaning and significance of independence in relation to the provision of assurance services b A description of the nature of other services provided and critical discussion of professional code requirements (Eg. Those of IFAC, APB) b An explanation and analysis of current and emerging developments in respect of the provision of other services to assurance clients b Justified conclusions, including your opinion on possible solutions and future developments Page 1
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Abdul Rauf 07419243 Accounting services can be defined as the preparation and analysis of financial information which is reported to internal and external users via financial statements. Auditing services involve evaluating the reliability and credibility of financial information, as well as "the systems and processes responsible for recording and summarizing that information" (Messier, Jr., Glover, & Prawitt, 2006, p. 5-6). Assurance services can be defined as independent professional services that evaluate the reliability, credibility, relevance, and timeliness of information in order to improve the quality of information for decision makers (Messier, Jr. et al., 2006, p. 15). Assurance services may or may not be associated with financial information. Part of the confusion today surrounding the role of auditing stems from a misunderstanding
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Audit Assignment - Abdul Rauf 07419243 INDEPENDENCE AND THE...

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