Ethical Issues In Auditing

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Introduction
Auditing is a systematic process of objectively obtaining and evaluating evidence to ascertain the degree of correspondence between the assertions and communicating the results to interested users. Whereas, auditors are the person who conducts the auditing procedures to obtain reasonable assurance that the financial statement are free from material misstatement, whether cause by the fraud or error.
Although ISA 240 recognized that the auditor may fail to detect material misstatement caused by fraud as the financial statement is well concealed and embedded, but it still does not exclude auditor from detecting fraud (Hasaan, 2013). Besides, it also mentions that it is the responsibilities of auditor to consider fraud in auditing
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Other than that, the reliabilities of the financial statement also will be suspected if there is a breach of auditor’s objectivity. Due to this, auditors should avoid this kind of problem through the conflict resolution process in order to maintain their independence.
If the above situation is not properly managed, the expectation gap will be affected. This is because the public’s perception on the auditor’s responsibilities is not met by the auditors as the auditor is fail to detecting the fraud and involving in the threat that affect independence. Although, the failure of detecting fraud is not necessary the fault of auditor but certain public users might consider that it is the auditor’s responsibilities as they lack of knowledge about the limitation of the audit
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Therefore, an auditor is not exclusively to satisfy the needs of an individual client. An auditor shall comply with the ethical requirement by the by-laws. However, auditor often faces ethical dilemma and ethical conflict during their work. An auditor is required to resolve a conflict in complying with the fundamental principles through the formal or informal conflict resolution process (By-Law s. 100.15). When initiating either a formal or informal conflict resolution process, several factor such as relevant facts, ethical issue involved, fundamental principles related to the matter in question, established internal procedures and alternative courses of action has to be considers to determine the appropriate course of action. If the matter is ineffective, the auditor can consult with other appropriate persons such as ethical partners for help (By-Laws s.100.16). Additionally, auditor can also refer to the Tucker’s 5 model and American Accounting Association (AAA) model which provides a framework within which an ethical decision can be
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