Auditor’s Role The Importance to Overcome Ethical...

Throughout the years, the news covered stories of corporate scandals involving accounting unethical practices. These unethical corporate acts had a tremendous negative impact on these company’s stockholders, investors, employees and the whole U.S. economy. Most of these scandals would have been prevented, if the independent audits of these companies were conducted in an ethical manner. With this in mind, two corporate scandals will be the subjects of further review to understand that an auditor might encounter ethical dilemmas, if independence and objectivity are not part of the audit process. An auditor should keep objectivity at all times. Maire Loughran, a Certified Public Accountant and University Professor, explains â€Å"objectivity†¦show more content†¦It appears evident, based on the information above; the auditor in this case had more than a reason to engage in unethical behavior, and to fail to perform his duties as an auditor. Friehling had a conflict of interest. The auditor seemed to have made a decision, ahead of time, that it was on his own best financial interest, to keep signing off audit reports to maintain the image of his client’s company. The auditor probably thought this action would ensure Madoff’s company to continue operations. Furthermore it would guarantee ongoing future investments returns for his own investments with Madoff’s company, as well as the investments of his family. Also, it would allow him to receive professional fees, in a steady manner, for a job he had no intention to honor, and he made no effort to perform. An auditor needs independence to perform an unbiased audit. According to Iain Gray and Stuart Mason, an audit is an informed opinion, based on truthful and fair information provided by the interested party whom should be independent of the preparer/auditor (21). Based on this definition, an auditor must self-distance from the subject of the audit. An auditor must refrain to engage in other roles within the management of the company that is audited, in order to avoid intentional or unintentional interference, which consequently could jeopardize the independence of the auditor’sShow MoreRelatedAuditors Independence Case Study14460 Words   |  58 Pagesfirms are so pervasive. People rely extensively on the advice of experts. Often, these experts face conflicts of interest between their own self-interest and their professional obligation to provide good advice. Conflicts of interest played a central role in the corporate scandals that shook America at the turn of the twenty-first century. Many companies have joined Enron and WorldCom in issuing earnings restatements as a result of inaccuracies in published financial reports. Adelphia, Bristol-MyersRead MoreCorporate Governance in Banking Sector of Bangladesh16146 Words   |  65 Pagesinformation disclosure and transparency, and shareholders rights. More specifically, the objectives of the study are to: †¢ Investigate the commitment to implement good corporate governance practices among the banks in Bangladesh. †¢ Know the role, duties and responsibilities, composition, structure, practices, and performance evaluation and training of the members of Board of Directors †¢ Identify the control environment and processes of the banking sector of Bangladesh †¢ DetermineRead MoreTestbook Answers112756 Words   |  452 Pagesprobabilities are not available, in preparation for the introduction of decision making under uncertainty in Section 3.3. The analogy of this question is to the problem of subjectively assessing probabilities over the true state of the firm and of the role of financial statement information in refining these probabilities. Questions 7, 8, and 9 of this chapter can usefully be assigned in conjunction with this question. Alternatively, this question could be assigned as part of Chapter 3. CopyrightRead MoreAccounting Information System Chapter 1137115 Words   |  549 PagesSystems 1.8 Information technology enables organizations to easily collect large amounts of information about employees. Discuss the following issues: These questions involve traditional economic cost/benefit issues and less well-defined ethical issues. a. To what extent should management monitor employees’ e-mail? Generally, the courts have held that organizations have the right to monitor employees’ email. Such monitoring can have disastrous effects on employee morale, however. On the