If an auditor is, in fact, autonomous, but some factors imply the opposite, this might possibly lead to an assumption that the audit is biased and unfair. Will’s independence in appearance could have easily been compromised if investors were aware of his affiliation with Jess. In fact, his independence in mental attitude was indeed compromised. Because Jess is his friend’s wife affected Will’s emotional stress. This situation dimmed his result when he reflected that it could have been a mistake.
It is important to the external auditors to maintain skepticism and professional due care in doing auditing. However, the level of skepticism of an auditors should not be decreased even though the level of fraud risk in the management was assessed to be low. If auditors have less skepticism and suddenly fraud was found in the management, hence it will caused auditors to do more audit procedures that is mean more costs to incur. Therefore, we recommend that, every auditors need to maintain their skepticism in doing audit work, no matter that auditors has belief the internal control of the management is good and whether auditors has experiences regarding the management fraud. Senior level of auditors may always supervise the lower level in ensuring that they are exercising professional skepticism as required.
According to Ernst audit agreement, the audit personnel should understand the major issues to management, especially when the informants are the key personnel audit clients and senior managers, should be more Ernst matter as a key concern. In accordance with the auditing standards, the financial statements fraud report, Ernst & young have occupation duty and communication with senior management and the audit committee, pointed out that the major or improper disclosure statements are refused to publish the audit report. In 2010 years Lehman's bankruptcy in the process of investigation, Ernst & young partner admitted that they know the years of Lehman "operation Repo 105" and its economic nature, but have taken an indifferent attitude. Ernst & Young turned a blind eye to Matthew Lee's report and failed to take appropriate auditing methods, which resulted in gross negligence and negligence and accelerated the failure of the
4) DUE PROFESSIONAL CARE, SKILLS AND COMPETENCE The internal audit activity should collectively possess or obtain the knowledge, skills, and other competencies to perform its responsibilities. Internal auditors should not apply the care and skill expected of a reasonable prudent and competent internal auditor. 5) DOCUMENTATION AND PLANNING The internal auditor should document matters, which are important in providing evidence that the audit was carried out in accordance with the standards on internal audit and support his findings or the report submitted by him. 6) EVIDENCE The internal auditor should obtain all evidences considered necessary for the expression of an informed opinion. He should document matters that the expression of an informed opinion.
The model is expected to act within socially acquired rules which are the social expectations of the public from the auditor to prevent fraud. The rules have indicated in clear terms that the internal audit is that arm of management that is responsible to prevent fraud in an organization which is in line with the users of audit reports
They expect and demand unreasonably and unjustified services from auditors. Almer and Brody (2002) affirmed that a business failure is always associated with an auditor’s failure; in spite of the fact, he takes all appropriate measures. He additionally added that one of the possible causes of the expectation gap is the auditor’s ambiguous communication with customers. They argued further that an auditor can carry out his audits in accordance with the generally accepted auditing standards and still be found negligent in not preventing risks to financial statement users. However
This confirmation will entail that the employee has full and understanding and will comply accordingly to the code of ethics To comply with sections 406 & 407 of Sarbanes Oxley it will be disclosed weather or not officers are held to compliance of the code of ethics. The officers especially the senior officers must sign the same affidavit as every other employee along with attending the same annual ethics seminar. All associated auditors must also comply with the IIA code of ethics Violations & discipline Any suspicion: of fraud, criminal acts, or potential violations will initiate an extensive investigation If a violation or fraud occurs there will be an assessment meeting to either add or alter internal controls to prevent the situation for occuring again Will have a record keeper to keep track and document these suspicious situations and fraud accusations. Will allow people of authority or sufficient reasoning to access the records Internal Controls & The Anti Fraud Process New additions/alterations to the current internal
When an employee does something fraudulent, he should penalize the culprit and disclose the fact by allowing the outcome to be transparent to everyone in the organization. This implementation addresses a note that doing something incorrect has a cost and the employee is at a disadvantage by behaving unethically (Robbins & Coulter, 2014). The code of ethics, a desired choice for minimizing uncertainty, can also be introduced. It is a traditional declaration of an organization’s values and ethical requirements employees are expected to go along with. It should be meticulous enough to show employees the attitude in which they’re required to do things yet loose enough to permit for the liberty of judgment (Robbins & Coulter, 2014).
It is also important in this regard to guard a member’s from any sort of exploitation and also teach them to respect their fellow worker and honour their sentiments, I have successfully incorporated the above principles in my work as an Audit Assistant working on my own as well as being part of the whole group. To upheld the proper professional values and ethics it is very important to gain the confidence of the members and develop in each individual a high sense of moral. Personal and private information should not be made public. The interest of one person should not take priority and all members should be treated equally. Productivity level increases when resources are utilized in best possible way higher productivity resulted in minimum wastage of time, money, efforts and
Authority: The Audit Charter should clearly specify the Authority assigned to the Information Systems Auditors with relation to the Risk Assessment work that will be carried out, right to access the Client’s information, the scope and/or limitations to the scope, the Client’s functions to be audited and the auditee expectations; and 3. Accountability: The Audit Charter should clearly define reporting lines, appraisals, assessment of compliance and agreed actions. PHASE 2 – Risk Assessment and Business Process