Auditing Role Playing - Essay Example

University> By AUDITING ROLE PLAYING SCENE ONE MANAGER: What are the key current issues in auditing? SENIOR AUDITOR: One of the key current issues in auditing is understanding the auditing process. Majority of the new or junior auditors are not conversant with the auditing process. As such, all companies involved in auditing should ensure that they have substantial knowledge of the procedures that are acceptable in the auditing process. JUNIOUR AUDITOR: The other crucial current issue based on the response by the senior auditors is the emergence of fraud and illegal acts in auditing. One of the most crucial challenge is whether the auditing team is aware of the factors that contribute to the increasing rate of frauds. Therefore, the other challenge is whether they have the necessary skills and strategies to minimize the losses that can occur during such incidences. STAKEHOLDER: According to me, globalization is one of the main factor that is increasing the rate of these frauds and related acts. For instance, a company can conduct business with people from different countries or regions. These are people who they have no information or clear knowledge about them. As such, issues such as frauds and other illegal acts is becoming a challenge in auditing (Houghton, Jubb & Kend, 2010). ASSURANCE STANDARD BOARD: The other sensitive issue also in auditing is the increased advances in technology. the use of computers, internet, and other technologies has led to the need for advanced auditing process. Advancement in technology has substantially change the speed and nature in which business is conducted. However, despite the numerous positive implications of such enhancements there are some serious disadvantages. MANAGER: What about the issue of advanced technology? I think the use of advanced technology in business has open numerous loopholes and opportunities for fraud and other illegal acts. In that connection, the current auditing team should be in a better position to implement vital strategies to ensure that such activities are minimized. This will play a crucial role in ensuring that associated implications such as losses are reduced (Houghton, Jubb & Kend, 2010). SENIOR AUDITOR: In addition to what we have discussed, I realize that there is an issue that arises in how the auditing team will implement the most appropriate policies and procedures to minimize fraud. One of the most crucial step that should be taken by the senior auditors or auditing team is to conduct diagnostic studies. JUNIOR AUDITOR: I want to add to what the senior auditor has just mentioned concerning diagnostic studies. In such studies, they should be able to identify the risks associated with fraud in auditing. As well, they should be able to identify all the misconducts in business that can lead to negative implications. the management must ensure that they are conversant with various implications of engaging in fraud during the auditing process. ASSURANCE STANDARD BOARD: I will also add that among the implications that they may face is that the company may lose its good reputation in the market. In such a way, auditing companies that are known to involve in fraud may not be trusted. As well, such auditing processes will be against the regulations and this may bring about various problems to the auditing team and the company (Houghton, Jubb & Kend, 2010). SCENE TWO MANAGER: In addition to what I had earlier on mentioned, I realized that one of the most crucial issues in auditing concerns auditing information. One of the most fundamental issues is the security of this information. For instance, there has been heated debate on whether auditors should be held responsible for the disclosure of the auditing information. It is imperative to note that there are some pieces of information in the auditing process that are not supposed to be disclosed to the auditors or the members of the management in any given organization. ASSURANCE STANDARD BOARD: I will like to add that there is a crucial issue that concerns the disclosure in audit process. This means that there is a substantial need for the auditors to be keen on regulatory laws and policies to ensure that the auditing process is conducted effectively and efficiently. JUNIOR AUDITOR: As Junior auditors across we are concerned with whistleblowing policy in auditing. Most countries and companies across the globe have policies that allow employees to raise concerns involving financial mismanagements. In such cases, the security of such employees such be guaranteed. SENIOR AUDITOR: I consider that reviewing of the current whistleblowing policies is an issue that needs to be streamlined effectively. Few crucial points should be noted when dealing with whistleblowing policies in a given organization. first of all, it is imperative that these policies and laws should be well documented and communicated to all the stakeholders. For instance, the employees should be aware of such policies, and this enhances their courage to raise concerns when they note improprieties. STAKEHOLDER: The other issue that I will mention is that such policies should guarantee the employees of their safety whenever they raise concerns. As such, it should be very clear whether the organization accepts raising concerns in such a case when auditing process is not done correctly or as expected (Houghton, Jubb & Kend, 2010). MANAGER: In addition to the above, the other issue that exists in the contemporary society is whether employees are involved when making critical decisions that relate to whistleblowing. Employees are the primary custodians of any organization, and their involvement should be highly guaranteed. SENIOR AUDITOR: I also want to contribute by saying that the other issue that arises is whether there are reasonable steps that are stipulated to ensure that their no victimization of genuine whistleblowers. In most cases, most of the organization especially that are involved in auditing are aware of the need to protect the employees who are considered as genuine whistleblowers. This is because they provide vital information that can lead to the safeguarding of the organization’s reputation and prevent losses due to fraud and other illegal acts. STAKEHOLDER: I feel that auditing managers should be in a better position to act with immediacy whenever issues of concern are raised. Success stories regarding whistleblowing should also be published for public use. In such a case, the move will ensure that auditing process is conducted in an accordance with the auditing procedures. This will be elemental in ensuring that emerging issues such as frauds and other illegal acts are minimized (Houghton, Jubb & Kend, 2010). SCENE THREE ASSURANCE STANDARD BOARD: The main issue that I find in the current auditing process is the content of the additional disclosures that are provided by the management or auditors. Auditors and the management thus must ensure that the most appropriate content is provided in such disclosures. For instance, the location and is one of the major things that should be indicated. STAKEHOLDER: As stakeholders, it is worth noting that one of the other crucial current issues in auditing is the management of earnings. One of the key issues regarding this challenge is whether the reporting management operations are conducted in the expected manner. It is profound to note that there are various cases of irregularities have been reported in the media concerning earning management practices. Some of the most common of these practices include use of reserve without justifying actions and inaugurate deferral of expenses. The quality of reported earning thus is becoming an issue of questioning and the auditing firm should be keen about it (Houghton, Jubb & Kend, 2010). JUNIOR AUDITOR: In addition to what the stakeholder has mentioned, investors and partners are the primary people that require correct information concerning the progress of the company. The need the correct information to be able to know where the company is and where it is heading to. Therefore, without the help of genuine auditing firms a company can disclose the wrong information which is a big danger to the partners and other investors. SENIOR AUDITOR: For me, it is profound to note that failure to provide such disclosures in a timely and accurate manner as associated implications. one of the most significant implication is that it weakens the bond that exist between the company and the stakeholders such as partners and other investors. MANAGER: As well, I will add that the trust in the capital markets is substantially shaken. Thus, the current auditors should be aware that such information happens and they should ensure that they initiate actions to counter them. For instance, if they realize that a given company has be continuously disclosing the wrong information what is their actions. They should have procedures to follow in making reasonable steps to prevent such actions in future. This is a clear indication that the current auditors should be knowledgeable to be able to amicably solve such issues in the contemporary society. ASSURANCE STANDARD BOARD: In the point of view of customers, I feel that disclosure of auditing process is one of the key issues in the contemporary society. It is profound to note that disclosure of auditing process plays a vital role. One of the key roles played by these disclosures is that it helps in overcoming the differences of view in the market for audit services. As such, this is one way that gives us information as customers of auditing opinions and services. STAKEHOLDER: From what the Assurance Standard Board has just mentioned, the main challenge in the market is the provision of these varied pieces of disclosures. The disclosure of these information is vital in ensuring that customers make informed decisions concerning auditing and related services. Thus, I feel that managers and managers should be encouraged to ensure that the right information is provided to the market (Houghton, Jubb & Kend, 2010). MANAGER: In continuation, the other current issue noted by the clients is the internal control over financial reporting. There are three main group of people that must be careful in this section namely; auditors, preparers, and regulators. Thus, the challenge is that auditors should ensure that companies improve their internal control over financial reporting to achieve success. SENIOR AUDITOR: I will like to highlight an issue we earlier on discussed that currently the case of fraud and related illegal acts is on the rise. However, the challenge is identifying the key issues that facilitates such increased rate of these acts. One of the key factors contributing to the increased frauds in auditing is the existence of an overly dominant manager with unfettered powers. If the manager is dominant and nobody questions them the case of frauds can increase tremendously. JUNIOR AUDITOR: I will add by saying that frequent changes in the auditing team is another challenge leading to frauds and illegal acts. The management should ensure that minimal changes over an extended period of time to minimize such acts. Auditors and other financial professionals that perform their duties as expected should be maintain to enhance the trust and reputation of such an auditing firm (Houghton, Jubb & Kend, 2010). STAKEHOLDER: It is also worth noting that customers are afraid when substantial sources of profits are clarified. Currently, there is a huge competition in both global and domestic markets. Thus, this has forced most of the companies to go futile on their sources of profits. This might be a good way of enhancing their competitive advantage but in auditing this is a challenge that opens various opportunities for frauds and related activities. ASSURANCE STANDARD BOARD: I agree with all your comments and I will add by mentioning that over complicated corporate structures is becoming a sensitive challenge and issue in auditing. For instance, some companies involve themselves in havens of secrecy. The main objective of such secrecy is to ensure that they are not exposed to the competitors. MANAGER: As I finalize my comments, let me mention that enterprise package solutions as well are becoming a current issue in auditing. The main challenge that is faced by the financial companies is the implementation and installation of such systems. The advancement in technology has led to the development of effective enterprise resource packages (ERP’s). SENIOR AUDITOR: Let me conclude the discussion by clarifying what the manager has just said concerning the use of ERP systems in auditing. The implementation of such ERP systems involves various changes such as infrastructure replacement, data conversions, and business process reengineering. One of the key advantages of ERP systems is that they integrate various departments leading to increased operational management. In the long run, this leads to enhanced quality of information management and decision making. As such, the current managers and auditors should be knowledgeable in regards to these systems and how they function within an organization. Reference Houghton, K., Ng, J., Jubb, C. and Kend, M., 2010. The Future of Audit: Keeping Capital Markets Efficient (p. 700). ANU Press. Read More