Auditors Ethical Responsibility

With the need for auditors to insure that companies have followed the prescribed guidelines set by GAAP their role is very important within the business community. Since the businesses themselves are tasked with hiring the auditor therefore becoming the employer leaves room for someone’s ethics to be challenged either by their own lack of restraint or by management causing the auditors ethics to be swayed by coercion. If you have an auditor that is working as an independent contractor they may want to be as easy on a company as a way of getting more business referrals. To help a company get a favorable audit would go a long way in drumming up additional business with the same company or as a referral for future work. The desire to want to do more work for that employer may cloud their judgment causing their ethics to be challenged. The company that is hiring the auditor may use that job opportunity as a way of trying to influence them into doing something wrong. Since the auditor is relying on this company as an employer the fear of taking away that job could be a useful tool for management to use against the auditor in question. Undo pressure could come from management to have the auditor give them a clean bill of health so to avoid scrutiny by the government and or investors. A bad audit could hurt a company financially and the best way to avoid that would be to have the auditor state that all is well with the company even if it was not. To do this the fear of losing income for this assignment as well as future income could sway someone to falsify an audit.