611 views An officer or employee of the company. The audit committee is responsible for ensuring that governance practices set an appropriate tone, and it oversees management's implementation of policies that foster ethical behavior. Audit committees should evaluate current and prospective risks, including reputational, operational, financial, legal, IT, and compliance risks. Although many recognize that the audit profession plays an essential role in the functioning of the global capital markets and adds value to the roles played by other stakeholders in the financial reporting process, others contend that the value of the independent audit, and the measure of its relevance to investors, is measured only by the absence of fraud or failure of the business once the audit is complete. B. We also have a responsibility to the public to add our expertise to the dialogue, and to encourage standard setters to reinforce that financial reporting practices keep pace with changing market realities. In addition, it is essential that auditors continue to be positioned to provide assurance on financial reporting, in any format. The importance of the auditor's exercise of professional skepticism manifests itself in several ways. As a part of this responsibility, management has the obligation to design, implement and ensure effective operation of a system of internal control over financial reporting. The independent audit process begins even before the auditor accepts an engagement with a prospective client. Other Points to be noted regarding appointment of auditors. Why do some companies rotate auditors? Similarly, if the firm is indebted to the company, the partner of the firm cannot be appointed as an auditor of the company. If the Chartered Accountant is holding a Certificate of Practice and is a partner of a firm of chartered accountants, the firm may be appointed as auditor. External auditors are responsible to the shareholders of the company. The reputation and integrity of management and the audit committee are a threshold issue in client acceptance and, while not widely known, most major audit firms typically perform detailed background checks on senior management and the audit committee as part of client acceptance procedures. Think of these four principal players as a string quartet; each has a part to play that is unique and distinctive. There are currently 73 offices of US inspectors general, far more than the initial 12 offices created by the Inspector General Act of 1978. IF a chartered accountant is indebted to a company, the firm( in which he is a partner) cannot be appointed as auditor. A Chartered Accountant should ensure that his audits are within the limits prescribed before accepting the appointment as an auditor of the company. These discussions, or more accurately, consultations, are an integral part of the give and take between auditor and client management. Users of the audit report, the sole product representing our responsibility to express an opinion on the company's financial statements and internal control over financial reporting, often do not see or fully appreciate the extensive, independent audit process: that an audit typically involves a detailed series of discussions with clients on complex and significant matters. Independent Auditors' Report: To the Board of Directors and Stockholders of ABC Company: We have audited the accompanying balance sheet of ABC Company as of December 31, 2001, and the related statements of income, retained earnings, and cash flow for the year then ended. The board then appoints the audit committee, which often oversees internal audit, and selects and hires the independent auditors. Audits the records and accounts of the various county departments. Audit independence is important so that auditor’s opinion can be impartial, unbiased, free from any undue influence or conflict of interest to override the professional judgement of the professional accounting (Rutgers Accounting Web, 2015). In some cases, approval of central Government is also required. Audit by Whom. 1633 Broadway, New York, 10019-6754, NY, USA, You can also search for this author in The Sarbanes-Oxley Act of 2002 mandates that audit committees be directly responsible for the oversight of the engagement of the company's independent auditor, and the Securities and Exchange Commission (the Commission) rules are designed to ensure that auditors are independent of their audit clients. The auditor, as a knowledgeable advisor, assists the company in evaluating the alternatives, all the while observing the independence rules that prohibit the auditor from performing a management function. In theory, a company's auditors are appointed independently by its shareholders, to whom they report. 1. Authoritarian auditors expect much of their audit customers but do not explain the rules or provide tools to succeed. More than ever, closely held, family owned businesses and non-profits are seeing the merits of hiring an external auditor to survey their books and validate their financial status. Steps also include consideration of new types of transactions, identification of unusual or significant transactions as well as consideration of past history of financial misstatements. 2. Robert J Kueppers. The auditor should be independent from the client company, so that the audit opinion will not be influenced by any relationship between them. Internal Audit Independence. 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