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Why should an auditor make decisions in the public interest rather than in the interest of management or current shareholders?
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Does every limited company have to appoint an auditor to protect the shareholders?
They are not required by law to appoint an auditor to protect the shareholders, but many do. This is not only to protect the shareholders, but to protect the company as well.
What is meant by an auditing independent mental attitude?
In auditing, keeping a independent mental attitude involves "professional skepticism". While an auditor should not assume that everything management says is a lie, he also shouldn't assume that everthing management tells him can be relied upon as true without any need for independent verification by the auditor. An auditor often deals with management, but his duty is not to the audited company's management, but rather to the directors, owners and potential future owners of a company, who will rely on the audited financial statements to make decisions about investment in the audited company.
Indicate the statutory rights that enhance auditor independence?
The statutory rights of the auditor that enhance auditor independence are: · s. 310, which provides that the auditor has the right of access at all reasonable times to the accounting and other records and registers, and an entitlement to require from any officer of the company such information and explanations as required for the purpose of the audit. · s. 329, which provides that an auditor may only be removed from office by a resolution at a general meeting of shareholders of which special notice has been given and the auditor is entitled to make written representations to all shareholders at the company's expense, and to speak at the general meeting. · s. 331, which provides that the auditor is entitled to receive reasonable fees and expenses for the work carried out.
Can statutory audit be done after tax audit?
Statutory Audits are those mandated by a statute. So by that definition even tax audit is a statutory audit.The management of the organization makes the appointment of an internal auditor. The statutory auditor is appointed by different authorities. First statutory auditors are appointed by the shareholders in the annual general meeting. The main object of the statutory audit is to form an opinion on the financial statement of the organization auditor has to state that whether the financial statements are showing the true and fair view of the affairs of the organization or not. The main object of the internal audit is to detect and prevent the errors and frauds.The scope of the statutory audit is fixed by the company act. it can not be changed by mutual consent between the auditor and the management of the audited business unit. The scope of the internal audit is fixed by the mutual consent of the auditor and the management of the unit under audit.
What is the job of internal auditor?
doing internal audit and help management
Why an independent auditor reports on financial statements?
to assure the shareholders that the company's accounts gives the true n fair picture of the company's affairs...
What is a management representation letter?
a management letter of representation is a letter written by the management to the auditor confirming all the representations made to him in the couse of his audit work
An auditor maintains no direct financial interest in the company he or she is auditing what is the principle being followed is?
Independence
Is words auditor means internal auditor?
No. The word auditor doesn't only mean an internal auditor but also an external auditor. An auditor could be an internal or an external auditor. In most cases simply an auditor means an external auditor.
Why can't auditors invest in companies that they audit?
The main reason an auditor cannot invest in companies they audit is of course that there is a conflict of interest. An simple example of this would be an auditor, auditing Apple Inc's accounts, the auditor would have prior knowledge on the companies profit, which would not be public knowledge until the results are made public. Based on Apple's performance an auditor who have information that could be advantage regarding as another example the possible up or down side of the companies stock price. There are numbers other examples such as an auditor conducting due diligence on a merger and acquisition. But the main reason is a conflict of interest
What is independent auditing?
It refers to the auditor having independence from the people that have a financial interest in the audit. It ensures the audit is not done with bias.
What are the Threats to Auditors independence?
Some threats to an auditors independence are as followed:Self-interest threat - when the auditor on the engagement team could benefit in some way or form (financially for example) with the clientFamiliarity threat - when the auditor has some form of a close relationship with the client (be it the top management or employees, or the firm) which may cause them to be generous and sympathetic when assessing the clientIntimidation threat - when the auditor is deterred from acting in an objective, professional manner as a result of threats (real or not) from the clientSelf-review threat- when the auditor is hired to review/evaluate any product or judgment that they themselves were responsible for preparing (from a previous engagement) in order to reach a conclusionAdvocacy threat - when the auditor promotes the client (their business, the client themselves, etc) to the point that objectivity may be (perceived) to be impaired
