The Effects of a Long term Auditor- Client Relationship on the Quality on an Audit

1320 Words 6 Pages
The Effects of a Long term Auditor- Client Relationship on the Quality on an Audit.Case study of AMG Global Masvingo.
Chapter 1
1.0 Introduction
This chapter relates background regarding the insight of the organization under review and the problem. Subsequent sections state the statement of the problem, main topic, sub research questions, research objectives and significance of the research. The chapter also examines delimitation and limitations of the study. Definition of technical terms are given at the end of the chapter.
1.1Background of the study
Marx ,B etail(2004) asserts that the audit quality is the basis of the credibility of the financial statements.According to De Angelo (1991) audit quality depends on the probability of
…show more content…
Thus, according to Carcello and Nagy (2004);Mansi ,Maxwell and Miller (2004), one reason is that the long term relationship between the auditor and client would make the auditor familiar with the client s' reporting issues and its operations thus enhancing the audit quality. Another reason is that in a short-term auditor - client relationship the auditors would not acquire sufficient specific information from the client ,hence in the long-term relationship the auditor can acquire every detail necessary to combine a high quality report says Shockley (1981).

During the past periods the firm was put to blame by their clients ' stakeholders for scandals arising from asymmetric decision making assuming that there is a bias to the audit report due to the closeness of the auditor and client according to minutes of 12 December 2012.Complaint has been that the reports were lacking credibility due to the lack of professionalism since the auditor becomes close to the client and personal.Accordance to the minutes of 12 December 2012, this matter has since raised concern to the firm as well as leading to the

Related Documents