Issues And Features Of The Audit Process Term Paper

Issues And Features Of The analyze Process - Term Paper ExampleIndependent auditing is encouraged in organizations in order to protect the potential investors and shareholders from any misrepresentation of the financial statement or fraudulent claims that are often make in the public companies (Gray and Manson, 2008 98). Moreover, after the Sarbanes-Oxley Act (SOX) introduced in 2002, the appointment of the independent auditor becomes mandatory for improving the auditing and accounting procedure. Many organizations are seen to appoint independent auditors, who are certified public accountants, responsible for checking their backing transactions and financial records, yet not being affiliated with it (Singleton, T.W., and Singleton, A.J., 2010 13). However, independent auditing is seen to suffer from a man-sized number of threats such as intimidation threat, trust or familiarity threat, advocacy threat, management threat, self-review threat and expedience threat. Therefore, safe guarding the independence of the auditors becomes a major area of concern. This report focuses on the safeguards for the independence of auditors. Safeguards to save the Independence of the Auditors On recognizing the significant threat of independence in the auditing process, the organization must decide on some safeguards in order to save the auditors. Some of the approaches that are considered by organizations are as follows Mandatory rotation in the auditor In a case where an external auditor is serving a particular lymph gland for many years, they often end up building relationships with their clients, which make them less skeptical about their take in than that they would have been otherwise. The SOX Act has made it mandatory for the public company, who is the partner-in-charge, to rotate their auditors, at least every cinque years. However, for non-public companies, there are no such requirements for rotation of auditors.