Accounting

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Accounting

Introduction

            In facts, Knapp (387)[1] uses real cases to equip students with the working environment of auditors. The case is essential in the sense that, it recognizes various challenges faced by audits.  With no doubt; the examples pulled from actual auditing case enables many students to recognize critical factors along with circumstances that determine outcome audits. In other words, the case provides both the work role and environment of independent auditors. With this regard, this paper seeks to analyze three questions in pertain to auditing in regard to the case study.

1. 1.      Explain why some corporate executives may perceive that their independent auditors are necessary evil.”  How can auditors combat or change that attitude?

It is borne in mind; auditors’ independence is characterized with integrity and objective. They carry out their work freely with an objective manner. In facts, it becomes a big challenge for independent auditors in the sense that, their interest may not align with corporate executives. With no doubts; the independent may not align with the code of ethics of the corporate. With this regard, Knapp (367)[2] outline a case of Messina who in her auditing professional experienced various challenges. From the assumptions, there are various reasons why some corporate executives perceive their independent evil is because.

First, reluctance to invest may cause corporate executives to outline independent auditors to be evil in the sense that, the latter may be forced to invest resources and time to learn about an organization in cases when the auditor consent is short. As a result, they lose interest to corporate executives. Secondly, due to high rate of audit failures in the first and second year due to the time required for an effective audit approach. Thirdly, the investment done in independent auditors may involve massive cost, which to some extent, May disrupte other activities. Both auditors and corporate executives may change the attitude by jotting down the required amount to spend and length of carrying out credentials (Zenoff 35).[3]

 

 

 

 

1. 2.      Compare and contrast the responsibilities of an audit partner of a major accounting firm with those of a large public company’s CFO.  Which work role do you believe is more important?  Which is more stressful?  Which role would you prefer and why?

Similarities

According to Dicksee (30)[4], both the audit of a major accounting firm and CFO in a public company plays a major role in auditing. Secondly, both seek out to achieve goals in audit firm that entails appraising and reviewing the application of accounting that promote an effective control. They both oversee finances and ensure that they are going in the right direction

Differences

First, the CFO oversees finances of their company, while audit partners ensure that, CFO with accounting department are abiding into regulations. Secondly, the audit partner review the accounting practices made by the company, while the CFO address the strategic accounting practices from their company standpoint of view. Thirdly, the CFO ensures that all assets are spent wisely for the benefit of the company, while audit partner carry out his duties externally through effectively reviewing what the company has made (Richhiute 35).[5]

Based on my point of view, I outline the CFO duties essential in the sense that, he oversees financial direction of the company thus, ensuring growth. I would prefer the role of CFO because he enhances the company to work in the right direction.

1. 3.      What professional standards apply to “due diligence” investigations performed by accounting firms? 

According to Dicksee (30)[6], the due diligence investigations performed by accounting firms concerns depth and range. This stands when what is in hand carries rewards and risks, when outcomes become critical nature and when something is high-level importance. Due diligence is performed when hiring major employees, loaning large amount, for substantial investment and when engaging to the new vendor central to operations.

 

 

 

 

 

 

 

Work cited

Dicksee, Lawrence. Auditing: a practical manual for auditors. London: Ayer Publishing,   1976.   Print

Knapp, Michael. Contemporary Auditing: Real Issues and Cases. New York: Cengage      Learning, 2008. Print

Richhiute, David. Auditing. London: Thomson/South-Western, 2006. Print

Zenoff, David. Corporate finance in multinational companies. California: Euromoney       Publications, 1986. Print

 

 

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