"Ethical Considerations" Please respond to the following:
The Public Company Accounting Oversight Board, the PCAOB, places many responsibilities on auditors. Auditors have a responsibility to remain independent and a skeptic. It is there duty to ensure financial statements are fairly presenting and in accordance to generally accepted accounting principles. These expectations placed on auditors may seem adequate but when it comes to new and emerging issues, fraud still occurs. It is possible that in the future auditors will be held personally responsible for ensure adequate audits are performed, similar to the SOX Act placing personal responsibility on the financial statements corporate executives release to the public. It is possible that if auditors are held more accountable to performing adequate audits, they are less likely to be involved in these fraud schemes that are still present. The PCAOB also needs to further education of these emerging issues to discover ways to uncover these issues and help prevent these issues from occurring.
PCAOB. (2014). AU section 110 responsibilities and functions of the independent auditor. Retrieved on Dec, 15, 2014 from http://pcaobus.org/Standards/Auditing/Pages/AU110.aspx
The enactment of the Sarbanes-Oxley Act, the SOX Act, was very influential to all public companies. It forced personal responsibility on corporate executives to ensure the accuracy of their financial statements they issue. It increased penalties those executives could face for issuing statements that were untrue. It also provided a need for auditors to evaluate financial statements for material misstatements and for adequate internal controls. While, this has aided in preventing or reducing the amount of financial statement fraud, fraud still occurs. Amendments can be made to the SOX Act in the future to ensure these current issues are addressed to hopefully reduce the amount of fraud.
Reflect upon the responsibilities placed on auditors by the PCAOB, and discuss whether those expectations are adequate considering current emerging issues.
The objective of the ordinary audit of financial statements by the independent auditor is the expression of an opinion on the fairness with which they present, in all material respects, financial position, results of operations, and its cash flows in conformity with generally accepted accounting principles ( PCAOB AUU Section 110)
Eligning performance with expectation is very important to stakeholders. By aligningon expections and having the right capabilites, internal audit functions can add significant value to their organizations as either an assurance provider or trusted advisor.Our srvey results indicate that those with a broader expection set (trusted advisors) are mre often seen as adding significant value.(2014 state of the internal audit profession study March 2014)
Audit committees need to know enough about their company to recognize when these conditions are present and, in that case, they need to receive what they hear with some skepticism. If audit committees do not do this, many of the improvements in the quality and reliability of financial reporting in recent years will be undermined just when they are most needed. Auditors also must play their part. No auditor should be unaware of the problem. The traditional audit qualities of rigor and skepticism will be needed, but they may not be enough. (KPMG Current and Emerging Issues)
Discuss whether the Sarbanes-Oxley Act should be modified to adjust regulation of corporate executives and auditors in response to issues subsequent to the 2002 scandals.
This is the focus