Changes in the audit recent years
Introduction. 2
Changes. 2
Causes. 5
Future. 9
Reference. 10
Changes in the audit recent years
Introduction
This essay describes the changes in audit system recent years and analyze of the reasons for these changes, and discuss the future development of audit.
The independence of auditors is growing these years. Since the Enron Scandal, the public are increasingly concerned about the audit, Accounting system has undergone great changes . The auditing profession are also thinking about their own future.
Changes
The auditing profession has been undergoing dramatic changes regarding its relationships with clients, users and the general public changed over the last decade.
The relationship between the clients and auditors is advanced by enhancing the independence of audit , which is the base of the trust between the two.
The trust relationship between investors (the principal) and business managers (trustee) is the most basic and most important relationship. The trust between investors and managers is based on the financial reporting information. However, the financial reporting information in highly specialized and complex nature, so that investors themselves unable to complete the process, he needs a consultant—auditors and auditors is an intermediary between the two. (Baker,1993).
First of all investors should trust the auditor, believe auditors have the ability to make correct judgments on the information before they can trust the managers under in the credibility of the information. So investors faced a new decision-making: whether to trust what the auditors and the basis for trust in the auditor?
In the vast majority of countries, the spokesmen of investors is the government, in order to protect the interests of investors, the Government adopted a series of institutional provisions to regulate listed companies and audit personnel. The auditing profession’s with relationships clients, users always Originated form the changes of regulatory regime. Changes in all systems but is to enhance the independence of audit.
Auditor independence is the essential characteristic. Auditors primarily perform the audit business to provide a verification of financial information for the parties. If the auditor does not remain objective and impartial, independent and impartial stance, they will inevitably harm the interests of relevant parties. And related changes in laws and regulations is to enhance the independence of audit to enable the auditor to make the most impartial judge to protect the interests of investors. (Bazerman, Morgan, andLoewenstein,1997)
1, auditors must have a compelling professional standards, it is the root for intermediaries. If the auditors have inadequate professional to find the hidden mistakes in the financial reporting, investors would think that the consultant is not trusted.
2 ,Auditors must has nothing to do with the client’s status, this is to ensure that auditors has nothing to do with their own interests whether they have trust or not trust the trustee, which can make them neutral judgments. (Borkowski and Ugras,1998)
3, Auditors must has nothing to do with the client’s status, his is to ensure that auditors has nothing to do with their own interests whether they have trust or not trust the trustee, For this reason above, Then they give the manager trust, even if it is a complete failure of the trust, it will not lead to any economic loss. The monitoring agency trust the auditors through laws and regulations, of cause the laws and regulations restrict the behavior of auditors. The audit agency and the companies strengthen cooperative behavior by Regulations and credit mechanism.
