Auditing and Accounting Ethics - Essay Example

External auditors must have the minimum requirement of passing the chartered accountants examination. Auditing theory and practice states that auditors must not sign as external auditors if their self interests affects the independence of auditors. The external auditors must be both independent in fact and in appearance. The auditing rule states that the auditor must not have any material self interest in the clients. An auditor has self interest if the auditor, the auditors spouse and children owns a share of stock or two in the audit client(Pollitt et al. 1999, 30).

The Companies Act of 1948 is the legal framework for external auditors to follow in terms of independence (Power 1997, 17). Evidently, many auditors will not allow their independence to be affected by self -interests . Also, many auditors will not allow their independence to be affected by self - review. The external auditor must adhere to the independence policy in taking on a new client. The auditor is mandated, without exception, to consider if self -review will affect his independence. The auditor must not continue with the audit or sign as external auditor if he or she believes that self review will violate the auditors independence.

Clearly, many auditors will not allow their independence to be affected by self – review (Watkins 1998, 29). Further, many auditors will not allow their independence to be affected by advocacy. The auditors membership in a group will have a strong impression that the auditor is not being independent. The Code of Ethics for auditors state that auditor must not have his membership in an organization affect the independence of the auditors. The auditors must be independent in fact and in appearance.

This means that a slight dent in his independence would raise doubts as the auditors independence. Consequently, the auditor must turn down such an engagement. Undoubtedly, many auditors will