Assignment of Auditing - 1402 Words

A professional judgment is a key factor in auditing. As a result of development of auditing and accounting industry, especially after a series of accounting fraud and auditing failure cases, such as Enron and Arthur Andersen, in the last decade, professional judgments is becoming a more and more important aspect for the independent auditing industry. Recently, many countries and professional bad issued more strict auditing standards to emphasize to this point. It means the auditor should be required to take broader processes and consider more types of information when he/she doing auditing job. The auditor must be more careful when he/she using professional judgments to identify the risks of material misstatements. At the same time,†¦show more content†¦In this place, auditing risk become very high and auditors must be very careful to use their professional judgment. An acceptable process is increasing substantive test. Every material transaction should be checked and redefi ned. These four aspects above are focused on accounting methods and standards. The conflict is caused by the difference between auditors’ professional judgment and management’s business judgment. In above example, even if these directors are honest and reasonable, the conflict is hard to remove completely. Moreover, there are other factors will influence the business judgment and professional judgment. The first factor is internal control system. As we know, the level of internal control system will significantly influence the inhere risk in auditing. Under the good internal control system, the quality of accounting figures is more accurate and acceptable. Hence, the level of auditing risk become lower and the auditor may reduce relative substantive test under his/her professional judgment. On the contrary, poor internal control will sharply increase the risk of auditing. To avoid auditing failure, auditors have to depend on their professional judgment and take large amount of substantive test. On the other hand, the level of an enterprise’s internal control depends on its management’s business judgment and theirShow MoreRelatedAuditing Assignment1425 Words   |  6 Pagesauditor. (APESB, 2013) | * Accepting the discounted yearly membership may pose threats to the integrity, objectivity and independence of David, * He could be influenced to return a favour to t he firm * Give an impression that David attended assignment is bias and will not benefit the public. | Part C: Members in Business | | S300.6 Cannot knowingly engage in any business that impairs or might impair the good reputation of the profession. S310.3 Threats arising from pressures shall beRead MoreExternal Auditing: Assignment1203 Words   |  5 PagesWeek 7 Assignment Chapter 20, pages 623–625: Problems 20-17 and 20-20 20-17 a. (2) b. (3) c. (3) 20-20 1. 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