In a short essay, list and discuss the three potential conflicts of interest that can take place during the auditing process.
What will be an ideal response?
a. Auditor-firm conflicts of interest—the firm could potentially put pressure on the auditor to sign a “clean audit” regardless of any concerns the auditor has with the statements since the auditor has a financial incentive to please the firm because the firm is a revenue-producing client for the auditing firm. However, the auditor has to abide by all the accounting standards and guidelines when he or she makes the overall evaluation of the integrity of the financial statements.
b. Shareholder-management conflicts of interest—since the shareholders do not want any
negative issues relating to the firm’s financial statements, the managers of the firm will want to present “clean” financial statements to the shareholders. However, the auditor also has a duty to the shareholders to review objectively the financial transactions of the firm because the shareholders, via the board of directors, have selected and pay the external auditors.
c. Self-interest-professional standards conflict of interest—the auditor may face a situation where he or she can benefit by violating the professional standards established by accounting organizations. For example, if an auditor has a financial interest in the firm, there would be a self-interest incentive to disregard financial transactions that have a negative impact on the firm.
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In the financial statements, the balance of the Petty Cash account and the balance of the Cash account are shown separately
Indicate whether the statement is true or false
You have been given the opportunity to earn $20,000 five years from now if you invest $9,524 today. What will be the rate of return to your investment?
What will be an ideal response?
Your philosophical orientation may stem from one of the several paradigms and approaches in research – positivist, interpretive, phenomenology, action or participatory, feminist, qualitative, quantitative, mixed methods – and the academic discipline in which you have been trained.
a) True b) False
In a multiple regression analysis, there are 20 data points and 4 independent variables, and the sum of the squared differences between observed and predicted values of y is 180 . The standard error of estimate will be:
a. 9.000 b. 6.708 c. 3.464 d. 3.000