Philosophy and Rhetoric of Auditor †Free Samples to Students

Question: Discuss about the Philosophy and Rhetoric of Auditor. Answer: Introduction The main objective of audit is to offer an organizations shareholders with expertize, and independent opinion or views as to whether annual account of an organization shows fair and true view of financial position and whether they could be depended on (Bamber Iyer, 2007). Audit enhance trustworthiness of the financial information by offering some written assurance from the self-regulating source which they shows fair and true view of the reports. Such independent could not unmet in case users come to realize that auditors were inclined by some persons, mostly the firms management (Nelson, 2006). This is because independence of auditor is the most significant aspect in founding trustworthiness of the auditing opinions. Basically, according to Reiter and Williams (2004) auditor independence is nowadays a troubled issues for quite sometimes. Some of the major issues of this concept are that there have been no doubts rooted in economic arrangement whereby the customers pay for the audit services. In other scenarios laying individuals on term of independence with some separative context given the serious economic connection in between the customer and the auditor is said to have some issues granting auditor their independence appearance. With these considerations, this essay present an evaluation of what auditor independence is as well as an evaluation of how auditors could be independent even when being paid by their customers. Explanation of Independence of Auditors Independence it the key means by which auditors shows that they could perform their duties in an objective way (Prentice, 2000). Auditors independent is the independence of the auditors from external or internal parties which might result to some financial interest in an organization being audited. Independence of auditors needs objective approach and integrity to audit process. (Moore, Tetlock, Tanlu Bazerman, 2006). It usually requires an auditor to conduct their operations freely and in the most objective means. In essence, independence of the auditors is the independent from those parties with interests which could be damaged by outcomes of the audit. It also implies independent from persons with some interests in financial data. Need for auditors independence mostly arise since in most scenarios users of the financial information do not have adequate knowledge or information in understanding what is contained in an organizations annual account (Moore, Loewenstein, Tanlu Bazerm an, 2003). Therefore, they heavily depend on auditors independence assessment. In addition, auditor independence is one of the chief objectives of auditing firm (Kinney, Palmrose Scholz, 2004). Nonetheless, this might only result in solving independence by their presence. In case auditors are changed every five years, they would look more independence, but this does not guarantee independence. Since auditors might not be 100%, this does not imply that they could not create opinion based on the evidence recovered from audit work, which might make them a bit independent. An auditor is independent when their decision or audit opinion is not at any point influence by relationship between the auditor and other parties (Nelson, 2006). In this case, they are usually expected to offer unbiased as well as honest professional notion on financial statement of a given firm to shareholders. At times doubts are expressed in regard to independence of the external auditors. It could be stated that unless important corporate governance measures are put in place, an auditor might reach audit judgements and opinions which could he greatly influenced by wish of maintaining relatively better relations with the organizations being audited (Bazerman, Morgan Loewenstein, 1997). In case such takes place, auditors could no longer be independent and shareholders could not heavily rely on opinion provided by these auditors. Auditors independence is usually the foundation of auditing occupation as it is the pillar of publics trust. Auditor can be independence in three primary means; that is investigative independence, programming as well as reporting independence. Programming independence usually protects auditors capacity in selecting one the most suitable strategy while conducting audit work (Derieux 2000). This means that auditors are allowed to slant any part of financial statement in whatever means they deem the best. On the other hand, investigative independence usually protects auditors capacity of implementing strategies in any manner they could consider fit. In this case, they have unlimited access to an organizations financial information. Further, reporting independence usually protects auditors capacity in selecting to disclose to general public info they strongly believe could be revealed. In this scenario, auditor independence is in a condition where it could be more likely to be compromise d. Interestingly, an auditor might be independent even whenever they are paid. This is based on the fact that though they are being paid by their client, auditors become less sceptical as compared to what they would have been if not paid and therefore they are very keen while conducting their audit work (Derieux 2000). This help them to observe high level of independence while conduct their job. Further, despite being paid by their clients, auditors still observe independence in that they want to enhance or maintain strong reputation of their accountants and to fairly as well as accurately report audit work such that their shareholders could make some sound decisions in maintaining confidence of general public (Corless, Bartlett Seglund 1990). Further, despite the auditors being paid by their clients they tend to observe higher level of independence. This is evidenced by the fact they tend to show capacity of acting with high level of integrity and being objective as well as maintaining an attitude of the professional scepticism which is crucial in enhancing audit independence (Derieux 2000). In addition, auditors are independence despite them being paid by clients in that they try to scrutinize all the financial statements presented by the management without being influenced by anybody in the organization since they cannot be fired for any reason and could not be fired for failing to show high level of integrity while conducting their audit work. Conclusion In conclusion, auditing said to be very important since it offer an organizations shareholders with expertize, and independent opinion or views as to whether annual account of an organization shows fair and true view of financial position and whether they could be depended on. In addition, it can be concluded that auditing is crucial since it enhances trustworthiness of the financial reports by offering some written assurance from the self-regulating source which they reveal fair and true view of the financial statements. Therefore, it can be concluded that independence is the key means by which auditors shows that they could perform their duties in an objective way. It can be viewed as independence of the auditors from external or internal parties which might result to some financial interest in an organization being audited. It can also be concluded that independence of auditor requires an auditor to conduct their operations freely and in the most objective means. In essence, it ca n be concluded that independence of the auditors is the independent from persons whose interest could be damaged by outcomes of the audit. It is also found out that independence of auditor arise from persons with some interests in financial reports. Therefore, auditor independence is one of the chief objectives of auditing firm. It is also found to be a process of auditors making their decision or audit opinion without being at any point influence by relationship between the auditor and other parties. Thus, they offer unbiased as well as honest professional notion on financial statement of a given firm to shareholders. References Corless, JC, Bartlett, RW Seglund, R J 1990, Psychological factors affecting auditor independence.The Ohio CPA Journal,49(1), 5-9. Bamber, EM, Iyer, VM 2007, Auditors' identification with their clients and its effect on auditors' objectivity, Auditing: A Journal of Practice Theory, 26(2), 1-24. Bazerman, MH, Morgan, KP, Loewenstein, GF 1997, Opinion: The impossibility of auditor independence, Sloan Management Review, 38(4), 89. Derieux, SA 2000, Let's Reassess Accounting Standards,Journal of Accountancy,189(5), 82. Kinney, WR, Palmrose, ZV, Scholz, S 2004, Auditor Independence, Non?Audit Services, and Restatements: Was the US Government Right?, Journal of Accounting Research, 42(3), 561-588. Moore, DA, Loewenstein, G, Tanlu, L Bazerman, MH 2003, Auditor independence, conflict of interest, and the unconscious intrusion of bias. Division of Research, Harvard Business School. Moore, DA, Tetlock, PE, Tanlu, L Bazerman, MH 2006, Conflicts of interest and the case of auditor independence: Moral seduction and strategic issue cycling, Academy of Management Review, 31(1), 10-29. Nelson, MW 2006, Ameliorating conflicts of interest in auditing: Effects of recent reforms on auditors and their clients, Academy of Management Review, 31(1), 30-42. Prentice, RA 2000, The SEC and MDP: Implications of the self-serving bias for independent auditing, Ohio St. LJ, 61, 1597. Reiter, SA Williams, PF 2004, 'The philosophy and rhetoric of auditor independence concepts', Business Ethics Quarterly, vol. 14, no. 3, pp. 335376.