...The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/0268-6902.htm The changing role of the auditors R. Jayalakshmy, A. Seetharaman and Tan Wei Khong Faculty of Management, Multimedia University, Cyber Jaya, Malaysia Abstract Purpose – To highlight the pressures that the auditors would face in the era of globalisation and the challenges they should be willing to accept in order to maintain trust and integrity. Design/methodology/approach – A wide range of articles and journals published in international journals as well as local journals has been reviewed. The areas covered include audit fraud, true and fair view interpretation, auditor independence and role of internal auditors. Further, ideas have also been obtained from critical write-ups in the business magazines on the fall of multinationals. Findings – A wide range of interpretation has been given by various groups of people on their understanding of the phrase “true and fair”. This has created great confusion as to the interpretation of the audit reports. This has been proven by the fall of many multinationals and the audit pioneers, Andersens. This is one of the causes of audit fraud and it is also seen that as the auditors face an enormous challenge as they enter the twenty-first century, they should be willing to change their attitudes towards their clients. Professionalism...
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...Sheet Course Name: Advanced External Auditing (AU2) Assignment: 1 Modules: 1 and 2 General Comments If you have any comments or suggestions for improvements of these marker’s comment sheets, please forward them to your marker or CGA-BC. Your feedback is important to us. PLEASE NOTE FOR SUBSEQUENT ASSIGNMENTS AND EXAM PURPOSES When answering assignment (and examination) questions, students should carefully read the requirements of the question. Marks are awarded for each valid point included in your answer. The specific terminology of the question is important. If the question asks for items to be “listed”, it is sufficient to list the items without explanation or elaboration. If, on the other hand, the question requires that items be described, a mere listing will not result in full marks being awarded. In general, marks are awarded for each valid point made and you should be guided by both the wording of the question and the number of marks available in deciding how many points are required and how much detail is needed. To receive full marks, it is necessary to provide enough detail (as required by the question) about sufficient points (as determined from the number of marks available). In answering an assignment question, review the lesson notes and required readings carefully and attempt to include as many valid points as possible in your solution. Advanced External Auditing (AU2) is the second course in external auditing and other assurance and...
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...Final Exam Review Practice Case IPI Case: Required: 1. Identify Accounting System Issues * System implementation * Lack of training * I: people try to override the system, inaccurate reporting * R: The company who installed the system needs to be contacted and hold training session for employees * Glitches * I: inaccurate reporting, create room for error * R: Contact the company again and get them back and give them responsibility to fix the glitches 2. Identify Control Issues: * Understaffing people are overworked, may get sloppy * R: Hire more staff * Lack of segregation of duties, bookkeeper does the bank rec and A/R ledger * R: Get someone else to do one of those duties * Mismatch b/w what’s shipped and what’s recorded as revenue since sales reported based on what they are supposed (when order is confirmed for shipment) but Louis goes down to the shipping department and adds a few more COGS is correct but revenue is not * R: Base revenues on actual quantities shipped * Year end cut-off error – Revenue: Takes 3 weeks to get the orders out but actg department records sales based orders * R: System is changed so that revenue is recorded only when shipment is confirmed, send shipping log to the actg department so they know 3. Policy compliance * Costs capitalized to inventory * IPI’s accounting policies state that only the rental cost...
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...1. Discuss whether or not CPAs who provide accounting, taxation, and related services to small business have a responsibility to serve as the “moral conscience” of their clients. The accounting profession requires ethical behavior in order to maintain the public trust. Ethical problems and dilemma arise when there is a conflict in fulfilling the moral duties or obligations and self interest. Therefore the CPA and public accountants are required to act in the line with the standards and code of ethics. According to the Utilitarian theory the action is considered as ethical if it results in achieving the greatest good to the maximum number of people. The AICPA principle of professional conduct requires that members should act with responsibility, in public Interest, objectively and independently, with integrity and due care towards the professional and technical standards to deliver the quality services. A profession is considered as a group of specialized people who posses skill based upon their impenetrable knowledge and thus they are expected to act in the best interest of public. According to the IFAC code, the responsibility of the professional accountant is not to satisfy the needs of the employer or the client but to serve the public interest. Adhering to the above expectations and professional requirements, the CPAs should serve as the moral conscience of their clients. When the CPAs come across any activity of the client which is not ethical they should discuss the...
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...THE JOURNAL OF FINANCE • VOL. LXIV, NO. 3 • JUNE 2009 Do Stock Mergers Create Value for Acquirers? PAVEL G. SAVOR and QI LU∗ ABSTRACT This paper finds support for the hypothesis that overvalued firms create value for long-term shareholders by using their equity as currency. Any approach centered on abnormal returns is complicated by the fact that the most overvalued firms have the greatest incentive to engage in stock acquisitions. We solve this endogeneity problem by creating a sample of mergers that fail for exogenous reasons. We find that unsuccessful stock bidders significantly underperform successful ones. Failure to consummate is costlier for richly priced firms, and the unrealized acquirer-target combination would have earned higher returns. None of these results hold for cash bids. THE LATE 1990S WITNESSED a large mergers and acquisitions wave. Many transactions involved equity as the mode of payment (Andrade, Mitchell, and Stafford (2001), Holmstrom and Kaplan (2001)), and this equity was usually very richly valued by historical standards. The positive correlation between market valuation and merger activity has also been documented in other periods (Martin (1996), Verter (2002)) and is especially strong for stock deals (Maksimovic and Phillips (2001)). One interpretation of this evidence is that managers try to time the market by paying with stock when they believe it is overvalued. Recently, a number of papers formally recognized this link between possible...
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...PENYELESAIAN AUDIT Sebagai bagian dari tahap IV proses audit, auditor mengevaluasi bukti yang mereka peroleh selama tiga tahap pertama dalam audit untuk menentukan apakah mereka mesti melaksanakan prosedur prosedur tambahan untuk tujuan-tujuan penyajian dan pengungkapan. Auditor melakukan pendekatan untuk memperoleh bukti untuk tujuan audit yang berkaitan dengan transaksi dan saldo. · Melaksanakan prosedur untuk memahami pengendalian yang berkaitan dengan tujuan penyajian dan pengungkapan sebagai bagian dari prosedur penilaian resiko. · Melakukan uji pengendalian yang berhubungan dengan pengungkapan ketika penilaian awal atas resiko pengendalian berada di bawah maksimum. · Melaksanakan prosedur substantive untuk memperoleh assurance bahwa semua tujuan audit dicapai untuk informasi dan jumlah yang disajikan dan diungapkan dalam laporan keuangan. TABEL 24-1 Tujuan Audit Penyajian dan Pengungkapan| Tujuan Audit|Contoh Prosedur Substantif| Keterjadian serta hak dan kewajiban|Mereview kontrak | Kelengkapan|Menggunakan daftar pengungkapan| Klasifikasi dan kemampuan untuk dipahami|Mereview laporan keuangan| Ketepatan dan penilaian |Merekonsiliasi jumlah yang dimasukkan dalam catatan kaki utang panjang dengan informasi yang diperiksa dan didukung dalam kertas kerja audit utang jangka panjang auditor.| II. REVIEW KEWAJIBAN KONTIJEN DAN KOMITMEN Kewajiban kontijen (contingent liability) adalah potensi kewajiban di masa mendatang kepada pihak luar untuk jumlah yang tidak diketahui...
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...An anonymous caller seeks help from her former university professor. The caller thinks that the company that he is working for only three and one-half month is committing a fraud. The main reason that the caller is worried is because he is the controller of the company and he has to sign the quarterly statement of his privately-held company. Those quarterly statements are for the bank that his company has the line of credit, those statements have to look good so that the bank approve their credit. There are two big problems in the case. The first one is the as he started on the company he had to sign the closing of the prior fiscal year. If the fraud was being made in the last year, he could be treated like an accessory to the fraud because he signs the statements. The other problem is that the CEO and CFO, the highest in command, are the ones that are committing the fraud. I would recommend that the caller has to report the fraud to the FASB. The Financial Accounting Standards Board (FASB) has been the designated organization in the private sector for establishing standards of financial accounting that governs the preparation of financial reports by nongovernmental organizations. Those standards are officially recognized as authoritative by the Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants. If the caller continues to work in the company he could get caught committing the fraud and could go to jail. There are two risks if...
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...Solution to question 9-37 i) The risks associated with the current method of accounting at Frankincents are as follows: The owner Gaboria Frank relies solely on Norma a part time bookeeper, that works two days a week with minimal or no supervision. The owner trusts the bookkeeper completely and the firm does not encourage control practices such as separate passwords and supervision Norma has developed the systems all by herself and is the only one who understands the nature of the software used. As the business owner, Gaboria should be aware of the systems put in place and should also consult his accountant before the implementations of the systems Only Norma is responsible for the complete accounting function and its activities, such as accounts receivable, disbursements, payroll, etc. There is no segregation of duties, and even though in small firms segregation of duties is not always possible, there is no override of control by the owner, giving the incentive and the opportunity for fraud. Additionally, Norma being a part-time employee may have the incentive and pressure to manipulate and increases the risk for fraud. ii) Being a small business it is not always possible to have segregation of duties and the owner, Gaboria Frank should personally perform operational and clerical activities such as accounts receivable, cash disbursements and payroll. This will give stronger control on activities that have high inherent risk and lower the opportunity and risk of fraud...
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...technology has advanced enough to help auditors find more efficient ways to audit. By using different auditing techniques and utilizing audit productivity software auditors can find errors in a business computer system faster and easier. Using this type of computer technology improves Audit documentation and processes. Computer Assisted Auditing Techniques or CAAT’s can be used to validate data and system integrity by using different types such as testing data, integrated test facility and parallel simulation etc. Also by integrating Audit productivity software such as electronic working papers, groupware, and reference libraries, and document management, an auditor’s personal productivity is enhanced. Validating Data Auditors use CAAT’s or computer assisted auditing techniques to validate data. Auditors validate data by using audit productivity software such as ACL. With new technology auditors are now able to extract client data and input into an audit productivity program. The data can then be analyzed quickly and efficiently. Auditors also use data query models that productivity software can help create or one can be created without it. The purpose of the data query model is to determine if the evidence obtained fits with the context of other information obtained during the audit, such as, personnel interviews, tests of controls, risk assessment etc. Computer assisted auditing techniques for validating data have made it easier to keep up with more efficient auditing; because...
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...and onwards pursuant to enactment of the Companies Act, 2013 As students may be aware, the Companies Act, 2013 has been notified in the Official Gazette on 30th August, 2013 stating that different dates may be appointed for enforcement of different provisions of this Act through notification of the Central Government in this regard. Having regard to the above development, the Council at its 333th meeting, revised the syllabus in a comprehensive manner in the following papers of Intermediate (IPC) and Final Course(s) as annexed herewith (shown in Bold cum Italics): Intermediate (IPC) Course Paper 1: Accounting (Group I) Paper 2: Business Laws, Ethics and Communication (Group I) Paper 5: Advanced Accounting (Group II) Paper 6: Auditing and Assurance (Group II) Final Course Paper 3: Advanced Auditing and Professional Ethics (Group I) Paper 4: Corporate and Allied Laws (Group I) Director, Board of Studies Annexure SYLLABUS PAPER 1: ACCOUNTING (One paper – Three hours – 100 Marks) Level of Knowledge : Working Knowledge Objectives : (a) To lay a foundation for the preparation and presentation of financial statements, (b) To gain working knowledge of the principles and procedures of accounting and their application to different practical situations, (c) To gain the ability to solve simple problems and cases relating to sole proprietorship, partnership and companies and (d) To familiarize students with the fundamentals of computerized system of accounting. Contents : 1. A General Knowledge...
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...Core Marker’s Comment Sheet Course Name: Advanced External Auditing (AU2) Assignment: 2 Modules: 1 to 4 Overview of Module 3: In your prerequisite auditing course, you learned that the financial statement auditor conducts the audit by preparing an audit plan in the context of an overall audit strategy. This strategy assesses risks, taking into account the size of the organization, the complexity and nature of client operations, and the objectives of the audit. This module builds on your understanding of the audit risk model and the audit process. The focus is on auditing the business as management operates it through the strategic systems auditing (SSA) approach. You learn how to revise the audit strategy in response to the nature of the client’s business and assessed risks. For example, you examine the effects of complex information systems and the quality of corporate governance over enterprise risk management, information systems security, and information technology management. You also relate the analysis of business performance to the financial statements. Overview of Module 4: In Module 4, you study the effect of information systems on control risk, considering both manual and automated procedures. After reviewing the overall effect on the financial statement audit and in particular on the audit of internal controls, you consider the phases of the COSO control framework. You also look at the types of controls and how these controls are audited for common information...
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...Core Marker’s Comment Sheet Course Name: Advanced External Auditing (AU2) Assignment: 2 Modules: 1 to 4 Overview of Module 3: In your prerequisite auditing course, you learned that the financial statement auditor conducts the audit by preparing an audit plan in the context of an overall audit strategy. This strategy assesses risks, taking into account the size of the organization, the complexity and nature of client operations, and the objectives of the audit. This module builds on your understanding of the audit risk model and the audit process. The focus is on auditing the business as management operates it through the strategic systems auditing (SSA) approach. You learn how to revise the audit strategy in response to the nature of the client’s business and assessed risks. For example, you examine the effects of complex information systems and the quality of corporate governance over enterprise risk management, information systems security, and information technology management. You also relate the analysis of business performance to the financial statements. Overview of Module 4: In Module 4, you study the effect of information systems on control risk, considering both manual and automated procedures. After reviewing the overall effect on the financial statement audit and in particular on the audit of internal controls, you consider the phases of the COSO control framework. You also look at the types of controls and how these controls are audited for common information...
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...Table of Contents Introduction 2 Population 2 Economic Structure and Major Industries 2 Major Firms 4 China’s Stock Market 6 China Securities Regulatory Commission 7 Legal Enforcement of IFRS 8 Summary of contents of financial statements 9 Transition Process of Accounting Standards 10 Auditing Standards 11 Full convergence with International Standards 11 Verification of Capital Contribution 13 Comparison of China’s old GAAP and IFRS 14 Accounting Education in China 15 The Chinese Institute of Certified Public Accountants 15 The CICPA Overview 15 The CICPA Examination 16 Accounting Student 18 China’s Cultural Influences on Accounting 19 Appendix 1. Comparison of CASs and ISAs (As of 2006) 22 Appendix 2. Accounting Firms in China 24 Introduction Population In 2012, China's population amounts to 1.3 billion – an increase of 365 million since 1980. Yet, population is growing at a decelerating pace and should reach its peak in less than two decades. Current methods of population control will be relaxed as the growth of population slows. The fertility rate is presently 1.6 births per female (below replacement level) and is expected to remain at that level in the medium term. The median age is steadily rising and by 2011 it was 35.5years –16.9 years greater than the figure for 1980. In fact, population aging is occurring more quickly in China than in most other countries. The country's working age population will begin to fall by 2017...
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...My interest in accounting can be traced back to my university studies. For three years I took all- encompassing fundamental International Business courses which awarded me a solid foundation in different aspects of business, I couldn’t help but notice what an essential role accounting played in every business transaction. Moreover, I have been hooked on detective fictions since I was a child. After I got contact to audit, I realized that independent auditor serves as the “detective” in the economic field. The business conditions and financial statements are “evidences”, and an auditor is supposed to testify independently that such evidences are backing the truth. I have been looking forward to auditing every business fairly to avoid economic tragedy based on my professional knowledge. Thereby I switched to the accounting major determinedly for in-depth study. During undergraduate study, my extracurricular activities included attending the online classes to expand the relevant knowledge. Such courses as Accounting and Value Creation and Business Financial Statement Analysis deepened my understanding of the accounting profession, enabling me to uncover the business information strategies, competitiveness, efficiency and quality, together with business risks and prospect through the financial statements. In addition, in professional research, I became interested in the accounting issues in the cross-border mergers and acquisitions and chose...
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... | |• Publication by the Auditing Practices Board of a guidance note to auditors of banks in Ireland | |• Appointment of a new director of corporate enforcement. | |• Implementation of new SEC independence rules. | |• Emergence of a more co-ordinated international approach to audit regulation. | | | |On the 3rd of August the Auditing Practices Board issued a draft practice note providing up-to-date guidance to auditors of | |banks in Ireland. The Institute of Chartered Accountants in Ireland led the project group which drafted the practice note on | |behalf of the Auditing Practices Board and there was extensive consultation with a number of government agencies and in | |particular with the Central Bank. | | | |The report is quite comprehensive and deals with a number of issues raised by the review group on auditing. In outline the | |issues addressed are as...
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