Auditing & Accounting Ethics Essay Example | Topics and Well Written Essays - 5750 words

Auditing & Accounting Ethics - Essay ExampleThe concept of tender independence during this age did not conceive of auditors as advocates for audited entities British investors explicitly forbade auditors from investing or working in the businesses that they audited. At the same period, as long as auditors retained their primary loyalty to the investors back home, the scope of professional accounting services could be reasonably broad. For example, auditors were permitted to keep the books and prepare the financial statements for the entities they audited (Hayes, Dassen, 2005 p.87).At the same time that independence requirements are becoming increasingly important, the auditing profession is tilting a changing landscape that is requiring the profession to face complex and difficult issues. Two of these changes have particular proposition relevance for auditor independence First, there has been a dramatic escalation in competition to obtain and hold onto auditing business. And secon d, auditors now often find themselves part of Brobdingnagian national (even multinational) organizations that offer a literal supermarket of nonaudit services and present greater opportunities for potential conflicts of interest. Let me discuss each of these phenomena in turn (Hayes, Dassen, 2005 p.87-88).An honest auditor will behave like someone who is independent, using independence to mean an attitude of mind that does not allow the viewpoints and conclusions of its possessor to become reliant on or subordinate to the influence and pressures of conflicting interests.There is an expectation that the auditor will have performed an audit that will have reduced the chances of a roaring negligence lawsuit to a level acceptable to the auditor. In the language of economics, the auditor will perform audit work until the cost of undertaking more than work is equal to the benefit the auditor derives in terms of the reduction in the risk of a successful lawsuit being possible. This then represents the tokenish amount of work that the reader can expect the auditor to perform. However, all auditors are individuals with distinguishable attitudes to risk and return and so one auditors minimum monetary standard of audit work will not necessarily be that of a colleague (Hayes, Dassen, 2005 p.88).This economic argument, while logical, would be unsustainable if certain auditors took advantage of the general self-reliance regarding auditor independence in order to obtain increased market share. In other words, for the economic argument to be effective, complete compliance with the belief of auditor independence would be required.In a general sense, auditor independence has borne a relationship to the prevailing commercial environment in different time periods.