Auditing and Professional Practice - Essay Example

UDITING АND РRОFЕSSIОNАL РRАСTIСЕ Course name: Professor’s Name: University name: Date of Submission: Executive summary Professionalism is a fundamental principle of work that should be evident in any given organization at any given time. Moreover, it is a key contributor to organizational success and provides an avenue for provision of high value and quality goods and services. Additionally, every company must be based on the principle of professionalism in order to engage well with other companies in a bid to creating a well-established relationship. Also, companies and any entity either governmental or non-governmental must take in the concept of audition as a way of maintaining its reputation and keeping the checks and balances as a way of ensuring that it remains focused on the organizational objectives. Auditing also ensures that the values of integrity, truthfulness and transparency takes center stage in any organizational setup. This is because of its continuous assessment formula that ensures that every employee is keen on check and has the responsibility for safeguarding the organization’s resources. Furthermore, it is imperative to appreciate that the culture of an institution plays a significant role in shaping its external reputation as well as impacting directly on its economic development process. In this case, the aspect of auditing and professionalism both in terms of finance and employee behaviors is an important phenomenon that needs to be taken into consideration Literature review (Elad, 2001) explains the importance of professionalism in any organizational set up maintaining that professionalism is a key principle that helps the organization in coming up with long-term objectives that can in one way or the pother sustains the needs of the company. Moreover, he continues to outline the key elements of professionalism citing the issues of time management, transparency, courtesy as well as truthfulness among the employers as being the key indicators of professionalism in a company. In his work, (Goodwin, 2001) describes professionalism as a key influence to the quality and value of any organizations production. He argues that without professionalism, many customers would run away from an organization in search for a better service center. Also, (Bardhan, 2011) outlines transparency and quality service as the key results of an effective auditing process of any Company. He explains this using the common consumer model where he brings out auditing as one of the monitoring tools that a company has to put in place to ensure a smooth running of the institution. Additionally, (Elad, 2001) explains in his work that the chief finance officer plays an important role in determining the economic growth of an institution. Introduction Audit refers to a sovereign and organized examination of the books of accounts within an organization in a bid to following up the operations and curbing fraud. Moreover, the whole process of auditing is geared towards ascertaining the length of an organization’s financial structure as well as those disclosures that are nonfinancial but present an accurate and reasonable vision of the alarm. Additionally, auditing also make it sure that the books of accounts are maintained in a proper manner being a legal requirement (Wilson, 2010). Moreover, auditing is not limited to the financial issues within an organization; every subject matter can be subjected to audit as a way of assessing its viability as well as impact on the development of the organization. For the non-financial matters, the audit is theoretical and involves a cross-examination of the company’s objectives and the achievements. Professionalism, on the other hand, represents the aspect of qualities, behaviors, competence and skills that are expected to bring physical therapy within an organization. Additionally, it is a virtue that must be inculcated into the company’s employees by the management in as much as the employees should also uphold it. Besides, professionalism indicates the aspect of working with standards while being in a position to establish ethical reasoning as well as decision making based on evidence. Moreover, professionalism dictates and determines the manner in which an individual manages certain sensitive material within the organization while taking into account the complex moral and ethical issues. Threats to compliance with the fundamental principles To be able to acquire reliable and accurate information pertaining to the organization, there is a need for compliance from within and outside the finance offices of the organization. Moreover, compliance ensures that the information given is up to date and consistent, making it easy to derive systematic information from them. However, there are so many threats to compliance that may not allow easy access to information. Such threats may either originate from within or outside the organization. For purposes of this discussion, I will explore two major threats that may hinder compliance with the .finance personnel of the organization. Insecurity - From my discussion with the chief finance officer, it is notable that insecurity is a fundamental influence and determinant to compliance. Moreover, every organization must ensure that their sensitive information does not fall into unauthorized hands. It, therefore, means that the company must be cautious enough to ensure that it keeps in an utmost careful manner. In this case, the CFO may not have been willing to share internal information with the public owing to the fact that such information impact directly on their economic development. Moreover, the office holders also look at their own personal security before releasing any information. Unprofessionalism - This is another big threat to compliance by the people within the officers to give appropriate information. Unprofessionalism may also mean inability to keep information in the best way possible. Moreover, this would mean that such information may be difficult to reach and hence not available to give out. Additionally, unprofessionalism in this case may also be used in the aspect of how the office bearers engage the information seekers. In instances where the CFO is not willing to give out the information, it may be difficult to retrieve the required data in the best way possible. Fundamental principles at risk of being breached In a bid to getting sensitive information, there are fundamental principles that may be at risk of being breached owing to the fact that they stand between the auditor and the information. Additionally, this may depend on the principles of the individual organization and the policies they have pertinent to sharing information. To this regard, there are two major principles that are at risk should the process of obtaining information go on as planned. Subordination - As part of any organization policy, information flaw has to follow a given channel depending on the positions and the seniority of various officers. In obtaining such information, insubordination would be a factor since it would be difficult to go through all the offices. Secrecy – it remains a serious principle in many organizations, a factor that is often used to protect the image of such organizations. In this case, this specific principle would be at risk if the officers shared sensitive information to the outside team. American Accounting Association decision- making model To take up action in this case, and using the American Accounting Association Model, Luke will have to follow a number of steps in order to make an informed decision as to whether Zane was on the safer side or whether the client was biased in one way or the other. In the AAA model, Luke will trail the following steps. 1. Launch the facts It is important to institute the legitimacy of the evidence at stake. At this stage, Luke will have to find any way of obtaining the correct information so as to have a baseline from which he can base his argument. Moreover, to get such facts, Luke has to remain as neutral as possible and be objective in order to get information from both sides. 2. Identify the ethical issues This means that Luke has to understand the circumstance within which Zane and the client are working, get to know whether the allegations made are in order and laid under the ethical requirement of the organization, most importantly, Luke has to understand his role in the whole process and ensure that he does not go overboard. In addition, it would also be important for Luke at this stage to study well the allegations put against Zane and compare them with the set ethical requirements within the organization. 3. Identify the norms At this stage, Luke can position the decision in its ethical, social as well as professional context. This will help Luke understand the norm within the organization and the way such issues have always been resolved in the past. Also, this would help Luke to understand whether the accusations are genuine or instigated in one way or the other, wing to the fact that any organization must have issues between the employees. 4. Identify alternative courses of action At this stage, Luke can have a variety of decisions to make, take all of them into consideration while putting into account all the factors that surround the whole story. It is at this stage that Luke needs to privately consult in order to have a wide range of thinking from which he can make decisions. Additionally, this would help him get a larger perspective of understanding the whole scenario without bias. 5. What is the best course of action? After considering a wide range of possible actions, and with a widespread level of consultation, Luke can decide on what to do about the case, whether to indulge in it or keep silent and forward it to the relevant authorities. At this stage, Luke must take into considerations both the interest of the client and Zane without forgetting his own interest. 6. Consider consequences Just before the final decision is made, it is important for Luke to consider all the consequences that there associated to any course of action that he may take. It is at this step that he can change the action if the one chosen earlier proves to have dangerous consequences. 7. The decision is taken At this stage, Luke is expected to have explicitly outlined the norms, values and principles that then allow him to take up a final decision that is of the best interest of everybody. Mary Guy decision-making Just like the AAA decision-making process, the purpose of this process is to come up with a final solution that is informed and that is practical considering all the factors at hand. However, the two models may not give an individual the same result even though the final outcome may be close to each other. Unlike the seven step AAA model, the MG model has a number of ten steps that Luke would have followed if he was to use it. 1. Defining problem At this stage, the main thing is to define the problem and understand it better. This helps in determining the nest steps and ensuring that the next decisions are made in an informed manner and with a starting point. 2. Identifying the goal to be achieved After defining the problem, it is important to identify the specific goals that are planned to be achieved by solving this problem. This move helps by creating a clear pathway through which the whole process should focus to. Moreover, this step ensures that the process is systematic and geared towards achieving a specific goal. 3. Specifying all the dimensions of the problem After the goal identification, the dimensions are specified to understand the need for a solution and the kind of a solution needed. This step also helps the problem solver to have a broad view of the problem as well as solutions. 4. Listing all possible solutions of the problem Listing all the possible solutions gives would have given Luke the chance to get a look at all the available courses of action. This could as well widen his thinking and scope of solving the problem at hand. 5. Evaluating each alternative After listing thee possible solutions, it is important to evaluate in a bid to determining their strengths and weakness pertinent to all the factors at play. Moreover, this step ensures that the evaluator gets the best solution and puts it into scrutiny. 6. Eliminating too costly alternative Those solutions that are too costly either in terms of consequences or interns of finance are eliminated so that easily achievable solutions are left and scrutinized further. 7. Ranking feasible alternatives Ranking the remaining feasible solutions then gives an opportunity to pick the most ranking and practical of them. This means that the base of the final decision is based on ranking alongside other factors. 8. Choosing the alternative to maximize values At this stage, the best alternative is chosen in a bid to maximizing the values 9. Developing an overall solution At this stage, the final decision is made taking into account all the factors that have been established in the earlier stages. 10. Committing to the choice made It is notable that even as the two models strive to achieve the same goal, they have a completely different structure that may in one way or the other influence the outcome of the whole process. It is, therefore, my belief that the use of this model would result in a different decision. Assertions at risk in relation to accounts payable With the changing contracts and hence factors affecting payments within an organization, there is need to fully understand the implications of such actions both outside and within the organization. In this particular case, there seems to be a peculiar twist in how the organization has always done its payment; a matter that is likely to cause confusion pertinent to the organizational activities (Thistlethwaite, and Spencer, 2008). Moreover, there are certain assertions that are likely to be at risk mostly due to the management’s reluctance to inform the accountant’s office of the new changes. The following are two major facts that could be aff3ectre. Customer confidence - Initially, there seems to have been a lot of confidence from the suppliers who are the organization’s customers. However, this state of confusion may reduce their confidence and even give them a new sense of thinking that might inform their decision to end their contract with the company. This may happen due to a sudden variation in the payment option and timing. Additionally, confidence from within the organization may also change with regard to how they handle their customers. This means that the organization will not be at ease to commit to any other client on matters payment. Customer relation - It is notable that the way in which the organization relates to its customers is likely to change with regard to the changing terms of references. This means that the organization will in a way have to change its ways of communicating to the already existing customers in a bid to making them understand the changes. Moreover, given that the management has not communicated to the accounting office, it would be difficult for them to change the policy but rather look into a way in which they can talk to the customers. Justification Customer confidence - Customers always bank their confidence on the payment options and timing of an organization. This is because the customers have a lot of things to do and depend highly on the amount of money paid to them for either business or personal satisfaction. In the event that the same customers may see a possible ply out, they may not be willing to continue engaging the same organization. Moreover, this has been seen in many organizations and is justifiable to mention owing to the fact that finance is an essential aspect of business operation. Customer relation – this often works in cases where the management has not officially taken the direction of changing policy to clearly evident to the customers. Besides, this means that the junior staff members have to design ways in which they can contain the customers in a bid to maintaining them, a factor that may cause inconsistency within the organizational activities and principles. To obtain sufficient evidence, in this case, it will be evident that the customers will not be willing to continue working with the organization as they have always worked. Conclusion Prior reviews on audit choice have taken benefit to using the varied checks the way it has been brought out in this work. The two key tests used comprise the call and place as well as the audit structures. The objective of the tests was to discover the connection between the customers and the audit report (Bardhan, 2011). The earlier interpretations involved key derives to supposition from the time mutual connotation. Many of the customers have fallen victims to the shock that hit their financial statements. For that reason, it has been good for them to build a well-identified audit plan. Bibliography Elad, C., 2001. Auditing and governance in the forestry industry: between protest and professionalism. Critical Perspectives on Accounting, 12(5), pp.647-671. Goodwin, J. and Yeo, T.Y., 2001. Two factors affecting internal audit independence and objectivity: Evidence from Singapore. International Journal of Auditing, 5(2), pp.107-125. Lin, S., Pizzini, M., Vargus, M. and Bardhan, I.R., 2011. The role of the internal audit function in the disclosure of material weaknesses. The Accounting Review, 86(1), pp.287-323. Thistlethwaite, J. and Spencer, J., 2008. Professionalism in medicine. Radcliffe Publishing. Wilson, C.P., 2010. The labor of words: Literary professionalism in the Progressive Era. University of Georgia Press. Read More