Preview

Critique Paper on Completing the Audit and Post-Audit Reponsibilities

Better Essays
Open Document
Open Document
2291 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Critique Paper on Completing the Audit and Post-Audit Reponsibilities
2013
Antonio, Mark Earl Angelo P.
ACT162 – B74
3/3/2013
2013
Antonio, Mark Earl Angelo P.
ACT162 – B74
3/3/2013
Critique Paper #03: Completing the Audit and Post-Audit Responsibilities
Critique Paper #03: Completing the Audit and Post-Audit Responsibilities

Summary The first article of Moez Bennouri, entitled “Does Auditors’ Reputation ‘Discourage’ Related Party Transactions? The French Case” studies the relationship between the frequency of RPTs and the external auditors’ reputation. Regulators, standard setters and market participants consider related party transactions a major problem in financial markets. The quality of external auditing may be proposed as an important governance mechanism to alleviate the propensity of insiders to use related party transactions. The study tests the prevalence of audit quality to reduce the number of these transactions. Audit quality is positively correlated with audit reputation. 85 French firms over the period 2002-2005 were used as sample. The French legal system concentrates on the reputation dimension of audit firms, as a motivation that mitigates the propensity of insiders to initiate related-party transactions. The results show that high quality external audit firms reduce significantly the frequency of related-party transactions. The effect of audit quality seems to be the most important variable explaining the frequency of related-party transactions. These results are obtained after controlling for the selection bias related to the choice of external auditors, using a two-step Heckman procedure. The second article of Feng Chen, et al, entitled “Fair Value Measurements and Auditor versus Management Conservatism: Evidence from the Banking Industry” showed the relationship between conservative financial reporting and the subjective nature of fair value measurements. The adoption of FAS 157 coincided with the economic difficulties brought by financial crisis and is seen by the researcher as a motivator


References: Title : Does Auditors’ Reputation ‘Discourage’ Related-Party Transactions? The French Case Author(s) : Bennouri, M., et al. Link :   http://www.researchgate.net/publication/228423282_Does_Auditors '_Reputation_ 'Discourage 'Related_Party_Transactions_The_French_Case4. Title : Academic Staff Views on External Quality Audit: Post Audit Evaluation in a Private Higher Education College Author(s) : Shah, M., et al. Link : http://www.aair.org.au/articles/volume-16-no-1/16-1-academic-staff-views-on-external-quality-audit-post-audit-evaluation-in-a-private-higher-educat Title : The Effect of Going-Concern Opinion Reliability on Market Prices Author(s) : Winchel, J., et al. Link : http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2195652
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Good Essays

    ACC 291 week 4 Comparing IFRS to GAAP
    • 832 Words
    • 3 Pages

    ACC 291 week 4 Comparing IFRS to GAAP

    Some steps which both the FASB and the IASB have taken in regards to moving the fair value measurement for the financial instruments have come a long way. FASB and ISAB are each individually, for the majority moving forward towards a fair value measurement for the financial instruments areas. Each believes in the fair value measurement rule to be a much more accurate description of how a company’s financial documents stack up. Of course, there is always going to be separate opinions and when it comes to the agreeing on every aspect within the financial world. However, in order to come to a conclusion between their difference, the decision was made to come together and disclose all of the fair value information off the financial statements, and on the notes as well. In addition, they both are willing to allow companies to record their financial estimates and values at a fair value within their financial statements, rather than require them to have this information. Even though utilizing the fair value is simply a substitution from the historical cost method.…

    • 832 Words
    • 3 Pages
    Good Essays
    Read More
  • Powerful Essays

    Principles of Auditing 17-30
    • 1014 Words
    • 5 Pages

    Principles of Auditing 17-30

    4. A client changed its depreciation method for production equipment from the straight-line method to the units-of-production method based on hours of utilization. The auditor concurs with the change.…

    • 1014 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Good Essays

    Summary of The Auditor
    • 1601 Words
    • 7 Pages

    Summary of The Auditor

    The Auditor by James K. Loebbecke tells a story about the life and career of an auditor named Jack Butler. The book shows Jack’s career from his education all the way to his promotion to partner. Loebbecke designed this story about Jack as a teaching tool to give students an understanding about the life of an auditor.…

    • 1601 Words
    • 7 Pages
    Good Essays
    Read More
  • Good Essays

    audit seminar wk 8
    • 587 Words
    • 3 Pages

    audit seminar wk 8

    No monitoring or supervisions of the clocking in process. This means that employees can abuse the system as proven by the worker caught clocking in his colleagues. This means that employees are being paid for work they are not doing. This will increase the payroll expense as more hours will be needed to complete the same level of work. It could also push back targets, with the possibility that it could cause delays in Chuck Industries shipping out products to customers. It may also lower morale in among employees who work hard and follow company protocols, if they see colleagues getting away with abusing the system, they may decide to follow suit. There is also the possibility that colleagues could be clocking each other out hours after leaving work, to try and get unauthorised overtime, increasing the payroll spend for the company…

    • 587 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Audit: the North Face
    • 283 Words
    • 2 Pages

    Audit: the North Face

    This case titled “The North Face” examines the accounting schemes used by North Face executives to enhance the company’s revenues and profits. These schemes primarily involved violations of the revenue recognition rule for certain barter and consignment transactions arranged by the company’s chief financial officer and vice-president of sales. Deloitte served as North Face’s auditors during the period when the company’s operating results were manipulated. The SEC’s investigation revealed that personnel of the prominent accounting firm had altered the workpapers prepared during an earlier North Face audit to conceal a critical judgment error made by a Deloitte audit partner. The SEC revealed that Richard Fiedelman failed to document changes that his subordinates had made in the 1997 North Face workpapers.…

    • 283 Words
    • 2 Pages
    Good Essays
    Read More
  • Good Essays

    week 5 auditing paper
    • 1016 Words
    • 5 Pages

    week 5 auditing paper

    Internal and external users of financial information require assurance that reports filed are accurate and transparent. Increasingly, both investors and legislators are requiring accountability from executives and financial officers. For this reason, auditing and assurance services must sign-off or attest to the credibility and reliability of written assertions. Creditors rely on the accuracy of financial reports when calculating the risk and interest rate of loans. Investors and employees need reliable information when allocating their precious resources. Governmental agencies require transparency and compliance to insure the public is not being victimized by fraud. Do increased auditing requirements guarantee that there will never be fraud? No! Increased auditing does not promise to prevent fraud, but it does assure us that due diligence is exercised to a reasonable degree in the examination of documents and compliance. Moreover, the benefits of assurance that come from auditing inspire businesses and the economy to thrive. Consequently, the attestation portions of financial reports are a requirement for the Securities and Exchange Commission (SEC) as well. Likewise, the Internal Revenue Service (IRS) itself must consider and factor in these variables when conducting their audits, since depreciation for tax purposes is not usually identical to the depreciation used in financial reporting. Auditing is a process that takes place when an auditor gathers unprejudiced evidence regarding the reliability and integrity of financial statements, compliance, and operational information provided by an organization. Audits can be performed by different people. Independent auditors, such as CPAs, and governmental auditors, or employees working for federal, state, or local government entities. There are different types of auditors who are not directly employed by the organization being audited. Internal auditors, however, are employed by the organization and go on to perform…

    • 1016 Words
    • 5 Pages
    Good Essays
    Read More
  • Good Essays

    Auditing: Understanding the Auditor's Report
    • 1523 Words
    • 5 Pages

    Auditing: Understanding the Auditor's Report

    ---The external auditing profession as a whole has became more concentrated on maintaining auditor independence and it is now one of the cornerstones of quality auditing. One way that independence can be violated is when an auditor shows bias towards an important user of the financial statements. Management, stockholders, bondholders, and taxing and regulatory companies are all important users that the profession has tried to avoid showing bias towards. The SEC has written principles that show independence is impaired when an auditor acts as management or an employer of the audit client or if the auditor is in any position of advocacy for the company. The AICPA also states that there are safeguards in place to avoid independence problems. Some that prevent potential bias are audit partner rotations of every 5 years, not allowing nonaudit work to be done by the external auditor, and rotation of senior engagement personnel. Overall, many things have been done to prevent potential bias towards particular users because it ruins the integrity of auditing.…

    • 1523 Words
    • 5 Pages
    Good Essays
    Read More
  • Better Essays

    Fasb and the Standard-Setting Process
    • 1208 Words
    • 5 Pages

    Fasb and the Standard-Setting Process

    Financial Accounting Standards Board (FASB) is a seven member board that consists of accounting professionals who establishes and communicates financial accounting and reporting standards known as generally accepted accounting principles (GAAP) in United States. The standards’ quest is to govern the preparation of the corporate financial reports and hence ensuring transparency, credibility and understandability of the financial statements. To achieve these, there is need to set guidelines that create uniformity in the preparation of the statements across the region. In this paper, we will focus on the FASB’s standard setting process and define the authoritative sources of accounting information that the board refers in setting the standards. More importantly, we are going to describe the general objectives of the financial reporting and the role of ethics in the statements’ reporting.…

    • 1208 Words
    • 5 Pages
    Better Essays
    Read More
  • Better Essays

    Fair Value vs. Historical Cost Accounting
    • 1181 Words
    • 5 Pages

    Fair Value vs. Historical Cost Accounting

    Penman, S. H. (2007). Financial reporting quality: is fair value a plus or a minus? Accounting and…

    • 1181 Words
    • 5 Pages
    Better Essays
    Read More
  • Good Essays

    In Dependence of Auditor – Enron and Arthur Andersen Case
    • 4928 Words
    • 20 Pages

    In Dependence of Auditor – Enron and Arthur Andersen Case

    Auditors are frequently faced with situations that may test their professionalism, ethic character, and independence. For example, auditors’ independence is tested when clients engage in opinion shopping - that is, when a client seeks the view of other CPAs, hoping to find an auditor who will agree with the client‘s desired accounting treatment. Clients sometimes attempt to influence the auditor to go along with the desired accounting treatment by threatening to change auditors.…

    • 4928 Words
    • 20 Pages
    Good Essays
    Read More
  • Better Essays

    Fair Value Accounting
    • 2109 Words
    • 9 Pages

    Fair Value Accounting

    Casabona, P. 2007. The impact of accounting profession’s movement toward fair value reporting in financial statements: An interview with Theresa Ahlstrom, Long Island Office managing Partner, KPMG LLP. Review of Business 27(4):6-9.…

    • 2109 Words
    • 9 Pages
    Better Essays
    Read More
  • Powerful Essays

    Audit Committee
    • 12893 Words
    • 52 Pages

    Audit Committee

    SYNOPSIS: To contribute to the Public Company Accounting Oversight Board (PCAOB) project on auditor communications with audit committees and boards of directors, we present in this paper a review of relevant academic literature. We also identify promising future research opportunities for the academic community. We specifically focus on how the communication process may affect overall financial reporting quality, internal controls, control environments, and external auditors’ performance, as well as matters that potentially impact financial reporting and should interest the PCAOB (e.g., in the area of management discussion and analysis). We specifically link the findings from academic research to the discussion questions posed by the PCAOB in its 2004 briefing paper. Several potential implications of the findings should also interest standard-setters and regulators addressing issues related to corporate governance and financial reporting quality. Keywords: communication between audit committees and external auditors; financial reporting quality; corporate governance; board of directors; internal control reports.…

    • 12893 Words
    • 52 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Fair Value: Is It Fair Game for Critics?
    • 1495 Words
    • 6 Pages

    Fair Value: Is It Fair Game for Critics?

    The Financial Accounting Standards Board (FASB), the accounting standard setters, issued Statement of Financial Accounting Standards No. 157 Fair Value Measurements that has set off a wave of controversy. Advocates, such as investors, support the idea of financial statements showing true value of a company’s assets and liabilities. Critics, on the other hand, think this pronouncement has caused volatile results in the current inactive market, blaming it for the current financial crisis. Also, fair value measurement has relevance, but another criticism is how much reliability the relevant information can provide.…

    • 1495 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Audit Quality and Cost of Debt Capital for Private Firms
    • 13029 Words
    • 53 Pages

    Audit Quality and Cost of Debt Capital for Private Firms

    The value relevance of audits to investors in both equity and debt has been extensively studied in the context of publicly-held firms, and the issue has recently gained increasing research attention also in the context of privately-held firms. The existing studies on privately-held firms have tested the debt pricing implications of auditing per se, the auditor’s opinion, accruals quality, and audit quality proxied by the audit firm’s reputation (i.e., Big 4 vs. non-Big 4)1 and auditor certification…

    • 13029 Words
    • 53 Pages
    Powerful Essays
    Read More
  • Good Essays

    Transparency in Accounting Essay Example
    • 4780 Words
    • 20 Pages

    Transparency in Accounting Essay Example

    Transparency in accounting has been a controversial issue in recent years largely due to events such as the fall of Enron, the WorldCom scandal, and the latest financial crisis. Supporters of greater transparency used these opportunities to demonstrate that if companies had been more transparent in the beginning, investors would have been better informed of reality and the financial crisis would have been less severe. On the other hand, critics blame transparency and the accounting profession for the financial downturn by citing Statement No. 157 issued by the Financial Accounting Standards Board (FASB) which deals with mark-to-market accounting (Rose and Trussel 2009). “Depending on the audience, fair value accounting is either the most controversial aspect of modern accounting or the most highly desired result of FASB’s current standards-setting project” (Schuetze 2006). The debate surrounding transparency raises the question of whether having transparency in accounting causes crises to occur or merely presents investors with an opportunity to “see” what is truly occurring within a company by reading the financial statements.…

    • 4780 Words
    • 20 Pages
    Good Essays
    Read More

Related Topics