Due professional care is to be exercised in the performance of the audit and the preparation of the report. It is inappropriate to audit your own work. Auditors must properly plan and supervise the audit in order to complete the engagement on a timely basis.
Auditors are expected to be unbiased and impartial with respect to the financial statements and other information they audit. The prudent auditor is one who exercises reasonable judgment, who is not expected to be omniscient, who is presumed to have knowledge special to his or her profession, who is Xacc 290 week 2 to be aware of his or her own ignorance, and who is expected to possess the skills of the profession, whether a beginner or a veteran.
In essence, an individual auditor must not subordinate his or her judgment to that of others and must stay away from influences that might bias judgment.
If an auditor is invested in any way in the organization that his is auditing, then the unbiased review cannot be assured. If an error in an accounting function is uncovered during an audit by the same person that caused the error, it is uncommon for even the highly ethical person to disclose their error.
The exercise of due professional care requires observance of all general standards and fieldwork standards but adds an additional element of professionalism. The concept of independence is necessary to provide impartiality and objectivity.
This is one of the major reasons that Congress came down so hard with the Sarbanes-Oxley Act.
Independence is critical in the auditing profession. My interpretation of this is to be thorough and objective. In the case of Enron, the Houston office of Arthur Andersen was involved in producing the financial statements and other accounting functions at Enron.
Why is independence often considered the cornerstone of the auditing profession? The integrity cannot be there. They are expected to be fair both to the companies and executives who issue financial information and to the outside persons who use it.
Why were independence issues a primary concern of Congress when they developed the Sarbanes-Oxley Act? The reporting should be clear and concise and include no misleading information. The notion of individual independence is more specific in the conduct of each audit engagement. Assurance services and the integrity of financial reporting.
The standard for due audit care is the care that would be exercised by a reasonable auditor in the same circumstance. Auditing and assurance services. If an inconsistency is found, investigate it completely to see if it may be just a honest error or an intentional act of misconduct.
I would think that if an audit firm followed the 10 GAAS properly and consistently, then the courts would consider the standard to have been met.XACC Week 2 Individual Assignment Exercise 1 This Tutorial was purchased 2 times & rated B+ by student like you.
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Ashford OMM Week 6 Discussion 2 Financial Analysis. Financial Analysis. R.E.C. Inc.’s staff of accountants finished preparing the financial statements for and will meet next week with the company’s CEO as well as the Director of Investor Relations and representatives from the marketing and art departments to design the current year’s annual report.
Individual. Exercise 2: Resource: Ch. 4 of Financial Accounting Complete Exercise BE Complete Problems A & A. Answer the following: · Commercial accounting and generally accepted accounting principles, generally prescribe the accrual basis of accounting over the cash basis.
Step-by-step solutions for Problem A in Financial Accounting 7th Edition. Great for anyone taking Week 2 of ACC Accounting Principles. The tutorial shows you how to prepare journal entries, T-Accounts, and a Trial Balance for Solis Company.Download