Auditing – 260 words – College Essay Example
Auditing – 260 words – College Essay Example

Auditing – 260 words – College Essay Example

Available Only on StudyHippo
Topics:
  • Pages: 1 (258 words)
  • Published: July 17, 2018
  • Type: Case Study
View Entire Sample
Text preview

Reasons for MAFR and partner signing

Positively impact on appearance of independence:

If the audit firm changes regularly, the purpose of being independent is more likely achieved. It separates the company and the audit firm and decreases the risk of familiarity or bias in appearance.

By removing the management's ability to threaten the auditor, such as by removing other services from the audit firm or reducing audit hours to lower the audit fee, objectivity may be compromised. If auditors believe that their audit work will affect their relationships with clients, they may be tempted to advocate for them. On the other hand, the MAFR and partner signing can have a positive impact on the quality of work by increasing the level of skepticism. When auditors are more independent, they are more

...

likely to apply a more critical approach to the audit work, bringing a fresh perspective and viewpoint.

Auditors tend to spend more time seeking evidence rather than assuming results based on experience or prior knowledge, which can make them more alert. Knowing that their audit work will be reviewed by another firm helps remove the tendency to overly rely on prior year's files. Mandatory rotation also has positive commercial impacts, such as the wider range of audit firms accessing opportunities and providing greater opportunities for firms of all sizes to tender.

The implementation of this strategy may allow smaller audit firms to acquire additional work in various sectors, provided that larger audit firms restrict their provision of other services in order to prioritize audit-related tasks.

View entire sample
Join StudyHippo to see entire essay
Get an explanation on any task
Get unstuck with the help of our AI assistant in seconds
New