Accounting Information Thereby Enhancing Confidence Of Investors Or Third Parties

765 Words Aug 18th, 2016 4 Pages
accounting information thereby enhancing confidence of investors or third parties (core purpose of audit). Independence is the logo of professional auditing and refers to the freedom of auditors from any undue influence of those that may have financial interest in the activity being audited. Both internal and external audits must be independent and devoid of bias with respect to the client or else the audit will lack the neutrality necessary for its dependability. In the cases of Enron and Parmalat, external auditor’s independence was dishonoured. Internal auditors must be independent both by status and professionalism from internal operations (audited activities) while external auditors must act independent of the client via legal rights and Auditing Practices Board codes, otherwise their assurance functions will be jeopardized. Furthermore, the objectivity in auditing cannot be overemphasised because auditors must not be influenced and should give a fair thought to all important issues. Both forms of audit requires approaches/judgement which must be thorough and not necessarily agreeing to the judgements of the client. Most fraud as in the case of WorldCom, commences through the manipulations of areas requiring judgement. Objectivity is necessary in auditing because most significant issues involved are not necessary “questions of facts but rather questions of judgement”. (Ethical Statement 1Integrity, objectivity and independence…

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