Three types of consulting services that audit firms have provided to their audit clients in the recent years which indicate the special threats for audit firm’s independence are as following. • Financial information systems design and implementation. Once the financial information systems have been designed, it needs to maintain and update in many situations.
If auditors design the systems for the clients, they would take too much power to control clients business. • Internal audit outsourcing service. Usually, the internal auditors have to assistance external auditor during the audit. If internal auditor also is external auditor, the external auditor independence will be impaired. • Human resources. If the external auditors act like a leader in the client’s firm, it will affect client’s business. Question 3, Given the assumption, I do believe that Andersen’s involvement in those decisions violated many professional auditing standards. • Independence.
No matter how they audit the financial statements, they will maintain the job.
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• Audit committee should establish strong relationship with the independent auditors. It will improve treatment of complaints regarding auditing matters. • Client’s managers should assist external auditors during the audit appropriately. It will reduce misleading and confusing in some situations. • Public company accounting oversight board should contact inspections, investigation and disciplinary proceeding concerning registered public accounting firms.
It will make public to trust public accounting firms more than prior. Question 6, I believe that there has been a significant shift or evolution over the past several decades in the concept of “professionalism” as it relates to the public accounting discipline. • In the past, CPAs use pens and calculator to audit financial statements. Right now, CPAs use computers to audit financial statement which is more effective. They not only have accounting knowledge, but also they have to develop their computer skills. • Starting last August, New York State changed the CPA exams required for candidates.
Before last August, candidates who only need bachelor degree with accounting major to sit for the exams. Right now, candidates have to finish 150 college credits to sit for the exams. Question 7, The auditor should treat to audit the quarterly financial statements as the same as the fiscal year financial statements. Although it may need more time to audit the financial statements and client needs to pay more audit fees, it at least reduces the financial statements risk or mistakes. It is better for client business and creditors. In my point of the view, I strongly support the financial statements should be audited quarterly.