azeem cwk - The following report will explain and...

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The following report will explain and critically discuss the issue of auditor independence with regard to the provision of other services. There are two kinds of auditing, that is internal and external (independent) auditing. Internal auditing helps provide entities with technical knowledge and improve the effectiveness of day-to-day operations of entity. An external or independent audit is working on behalf of shareholders, focuses on the assessment of the fairness of an entity’s financial statements that is expression of an opinion whether an entity’s prepared financial statements present fairly in all material respects in accordance with the financial reporting standards applicable to that entity. External auditors are independent from the audited entity so as they can provide independent view. The meaning of Independence “A Certified Public Accountant who provides a company with an accountant's opinion but who is not otherwise affiliated with the company”. The main purpose of an audit is to give independent, auditor’s opinion on whether the overall financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework. Independent auditor refers here to an auditor who is unbiased and honest. The independent audit report is then provided to a user such as an individual, a group of persons, a company , a government , or even the general public , among others, as an assurance service in order for the user to make decisions based on the results of the audit. However, auditor’s opinion should be governed by the procedures set by APB. To support the audit, the auditor must perform procedures to find audit evidence about the amounts and disclosures in the financial statements. In the manner of these procedures, the auditor accumulates findings and comments on the entity’s accounting and internal control system. The importance of Independence The importance of independent auditing is ahead of the compliance requirements of an entity. Importance of auditor’s independence is so crucial because auditors are agents to the shareholders. They translate and detect the work carried by managers to make them accountable for their stewardship. Without their independence, their work cannot be trusted and the main purpose of auditing would be lost. To test the independent of audits as a general rule a third party member should be able to detect that if it seems reasonable on the circumstances that if audit perceived to be independent or not. Objectivity alongside integrity is the key elements of independence.
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This note was uploaded on 10/24/2010 for the course ACCOUNTING INFS2005 taught by Professor Steven during the Three '10 term at Australian National University.

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azeem cwk - The following report will explain and...

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