The importance
Prepared by: Gabriela Bacigalupo, 1099953 Monica Jorge, 3622098 Youthalyn Mair-Pryce, 3622089
Reviewed by: Gabriela Bacigalupo, 1099953 Monica Jorge, 3622098 Youthalyn Mair-Pryce, 3622089
ACG 4651 – Fall 2013 Section 04
September 17, 2013 – Case #1: The importance of being independent (by Deloitte) Discussion Questions
One of the key roles of the external auditor is to protect the interest of the public. To achieve this, it is important for the public to trust and have confidence in the work of an auditor. It is crucial that auditors appear independent to the public in both fact and appearance. For this reason, it is the auditor’s responsibility to ensure that there are no personal or business relationships with anyone in a position of influence within the firm they are auditing. Even though the personality of the auditor might allow him to be unbiased and the audit is independence in fact, what is important is what the public perceives. Therefore, if the auditor is assigned to the audit team of a company that his/her uncle is the controller of that company; it definitely needs to be disclosed. It is not the nature of the relationship, but more importantly the position that the person has within the firm. A controller does have influence on financial reports. External users of the information may not accept that fairness and objectivity was exercised; and the information may be deemed unreliable because the auditor’s independence and professional skepticism will be questioned. It is also in the best interests of the audit firm that this information be disclosed and that the auditor be reassigned. This will enhance the integrity of the audit firm and the auditing profession. If the auditor does not disclose this vital information and later material misstatements cause users to suffer damages, both the auditor and the firm can be penalized.
Other professions such as medicine and law have ethical obligations similar to
Reviewed by: Gabriela Bacigalupo, 1099953 Monica Jorge, 3622098 Youthalyn Mair-Pryce, 3622089
ACG 4651 – Fall 2013 Section 04
September 17, 2013 – Case #1: The importance of being independent (by Deloitte) Discussion Questions
One of the key roles of the external auditor is to protect the interest of the public. To achieve this, it is important for the public to trust and have confidence in the work of an auditor. It is crucial that auditors appear independent to the public in both fact and appearance. For this reason, it is the auditor’s responsibility to ensure that there are no personal or business relationships with anyone in a position of influence within the firm they are auditing. Even though the personality of the auditor might allow him to be unbiased and the audit is independence in fact, what is important is what the public perceives. Therefore, if the auditor is assigned to the audit team of a company that his/her uncle is the controller of that company; it definitely needs to be disclosed. It is not the nature of the relationship, but more importantly the position that the person has within the firm. A controller does have influence on financial reports. External users of the information may not accept that fairness and objectivity was exercised; and the information may be deemed unreliable because the auditor’s independence and professional skepticism will be questioned. It is also in the best interests of the audit firm that this information be disclosed and that the auditor be reassigned. This will enhance the integrity of the audit firm and the auditing profession. If the auditor does not disclose this vital information and later material misstatements cause users to suffer damages, both the auditor and the firm can be penalized.
Other professions such as medicine and law have ethical obligations similar to