Nobody downloaded yet

The Role of External Auditors in Accounting - Essay Example

Comments (0) Cite this document
Summary
Pertaining to the profession of auditors, auditors’ liability has always been one of the main concerns of the public. Often dealt with common law, tort law or both, auditors’ liability could arise out of unfair or unjust practices when it comes to auditing a company’s financial standing…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91.7% of users find it useful
The Role of External Auditors in Accounting
Read TextPreview

Extract of sample
"The Role of External Auditors in Accounting"

Download file to see previous pages To prevent moral hazards associated with the auditors’ liability, the British Serious Fraud Office has imposed heavy penalities for swindlers and white collar criminals to shut down or suspend a suspicious business. On the other hand, auditors who are found guilty of professional negligence may end up facing a monetary loss or penalty through punitive fines and/or the confiscation of their license to practice auditing in the United Kingdom. As stated by Michael Power of London School of Economics, “it may not be reasonable to expect that auditors would be challenging business models directly and raising strategic issues with finance directors, that is not their job and if we want it to be their job then things would have to change quite substantially. The direction of my comment is that we might be expecting too much from this black box [External Audit] in terms of what it actually delivers”.
...
Based on the individual roles and responsibilities of shareholders, internal and external auditors, the board of directors, and the CEO, this report will explain the limits in the role and responsibilities of external auditors when it comes to detecting and controlling fraud activities in business. Role and Responsibilities of External Auditors External auditors are professionals who are hired to conduct audit based on the rules or laws on creating financial statements for the government, a private company, or a legal organization (The Institute of Internal Auditors, 2011). According to Kwok (2005, pp. 151 – 161), accounting irregularities can be made for the purpose of tax evasion or theft by creating ghost employees, skimming of the proceeds, or theft of an asset. Specifically in the United Kingdom, the Chartered Accountants or the Certified General Accountants are the group of individuals who are qualified to conduct external auditing. According to Poorter (2008), auditors within the United Kingdom has to perform a special duty of care to a liable third party. It means that the external auditors are made responsible in making fair, just and reasonable treatment to the company’s external shareholders. In case external auditors have a binding contract between the company and the shareholders of the said company, it is a general rule for the external auditor(s) to fulfil his/her statutory duty as an auditor to shareholders collectively or as a group. As a standard operating procedure, external auditors are expected to evaluate the financial statement of another organization on a yearly basis (Hicks and Goo, 2008, p. 261). Upon going through the financial statement of a government, a private company, or a legal organization, external auditors are expected ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The Role of External Auditors in Accounting Essay”, n.d.)
Retrieved from https://studentshare.org/finance-accounting/1412492-the-role-of-external-auditors-in-accounting
(The Role of External Auditors in Accounting Essay)
https://studentshare.org/finance-accounting/1412492-the-role-of-external-auditors-in-accounting.
“The Role of External Auditors in Accounting Essay”, n.d. https://studentshare.org/finance-accounting/1412492-the-role-of-external-auditors-in-accounting.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Former Auditors
... the former partner and the audit firm (Brayshaw). Works Cited Brayshaw, Geoff. "Testing Independence: Just how easy is the test for independence." Joint Accounting Bodies (2007): 46-47. Corporations Act. Corporations Act 2001. 10 April 2006. Woodbine, Gordon. "Making the Hard Decisions: What Issues Encourage Accountants and Auditors to be Loyal Agents When Faced with an Ethical Dilemma?" National Accountant (2007)....  Former Auditors The former partner or partners or other professionals of an audit firm may become member(s) of the board of directors of a company or hold any other position of authority in that company which has been an audit client of that audit firm. However, becoming member of the board of directors of...
3 Pages(750 words)Essay
Role of Strategic Management Accounting
...Role of Strategic Management Accounting Management accounting should be an effective and efficient tool used by managers and accountants at all levels in assisting them make decisions in their area of management. However, management accounting has for a long time since its introduction in accounting faced various shortcomings hence making it unable to perform this function effectively. Management accounting has failed in the application of qualitative features of management as well as the strategic thinking in management. As a result of the failure of management accounting, strategic management has been...
3 Pages(750 words)Essay
Factors Involved in Fraud Cases with External Auditors
...Factors Involved in Fraud Cases with External Auditors Introduction The auditors play a very significant role in the decision making procedures. They perform the responsibility of measuring the accuracy of financial statements of an organization. These financial statements are then utilised by owners of the companies for evaluating the management stewardship. It is utilised by investors for the decision making associated with the buying or selling of securities. The auditors provide guidance to the owners as well as investors for assisting them in their decision making procedure. The appropriate use of financial statements needs proper understanding of...
5 Pages(1250 words)Essay
Auditors' liability
...Auditor's Liability In the United Kingdom, companies are required to get their accounts and financial ments audited by external auditors. Thesestate guaranteed market of external audits are applicable to around 600,000 companies, schools, universities, trade unions, hospitals, government departments and charities who have to submit to an external financial audit by accountants belonging to one of the select accountancy trade associations. (Cousins et al, 1998) Contrary to the early reasons for having this law, state guaranteed market of external audits hasn't been able to provide a secure...
6 Pages(1500 words)Essay
Auditors independence
...Auditing Auditing Auditing is an incredibly important matter in the world today, and if you want to learn about a matter such as this, then there are several embedded matters that you will need to inform yourself on first; such as the fact that an auditor's objective is basically defined as that of "to provide a high level of assurance through the issue of a positive expression of opinion that enhances the credibility of an assertion about an accountability matter" (Gay & Simnett, 2003, p.745). However the fact of this auditor to be independent is clearly the most important factor here, and independence is defined as being the "ability to withstand pressure from management influence when...
10 Pages(2500 words)Essay
Business & the Role of Accounting
...Part I A. S # Transaction Details Accounting Equation Assets = Liabilities + Equity Assets Liabilities Owner’s Equity Owner invested $6,000 in business Increase (Cash) No Effect Increase (Owner’s Equity) 2. Borrowed $2,000 at 12% note payable for 1 year from bank Increase (Cash) Increase (Notes Payable) Increase (Interest Payable) No Effect Decrease (Increase in Expenses decrease Owner’s Equity by reducing profits) 3. Earned $900 revenue (Assumption: Revenue is earned in cash) Increase (Cash) No Effect Increase (Increase in Revenue increase Owner’s Equity) 4. Incurred $650 expenses (Assumption: Expense is paid in cash) Decrease (Cash) No Effect Decrease (Increase in Expenses decrease Owner’s Equity by reducing...
2 Pages(500 words)Essay
The role of Internal, External and Forensic Auditors
...of the organization’s financial information (Raaum and Morgan 2001 p 78). External Auditors Silverstone and Davia (2005 p 81) observe that an external auditor plays a significant role in determining and offering an independent and objective judgment regarding the effectiveness of the financial statements of an organization. He/she assists in the improvement of internal controls of an organization as well as its accounting systems through making the necessary recommendations after evaluating the books of accounts. According to Bologna and Lindquist (2004 p 113), the span of external auditing...
5 Pages(1250 words)Essay
Auditing/Auditors
...factors that are liable to affect the sample. In such cases, the sample size will be misleading and the probability of biasness will be high. The sample which is not properly designed and selected is subjected to risks and errors. This will increase the viability of truth and validity of the data and provide a misrepresentation of the facts. The misrepresentation will provide a false situation of the financial condition and facilitate deceptive course of action to be taken, hampering the performance of the business in due course of time (Hong Kong Institute of Certified Public Accountants, 1997). Question 3 The auditor needs to evaluate the result of auditing procedures based upon certain facts. The...
2 Pages(500 words)Essay
Role of Management Accounting
...Role of Management Accounting Management accounting is the back bone of an organization. It is meant to make available the edge techniques that lead to a successful association. It plays a very imperative role in leading an organization to the heights of its success. It helps the company to make sure whether it is financially and economically strong to compete with other leading organizations and to makes sure whether it is making the right progress to attain a sustainable position as compared to other companies. Management accounting has to make note of various objects that are required to make an organization prosper. Apart from collecting, recording...
1 Pages(250 words)Essay
A study of how to synergize the works of internal auditors and external auditors to listed companies
...Research Proposal: Synergizing the works of internal auditors and external auditors in listed companies Background Corporate governance sets conditions that listed companies transparently disclose their practices. In this regard investors have considered transparent company disclosure part of their criteria for selecting the company to invest in. From the investors’ viewpoint, distinct techniques matching globally accepted techniques acts as enabling influences for their rational investment choices. Within the United States there are securities markets, accounting and corporate legislation that direct the management and disclosure practices of listed companies. These regulations include comprehensive guidelines on how disclosures... ,...
6 Pages(1500 words)Research Proposal
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Let us find you another Essay on topic The Role of External Auditors in Accounting for FREE!
logo footer
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • StudentShare App Store
  • StudentShare Google play
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • Miscellaneous
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us