AUDITOR AND REPORTING FRAMEWORK

Role of the Auditor and the Reporting Framework

Role of the Auditor and the Reporting Framework

Introduction

It is essential to address the issue of the stability of the present regulatory environment in ensuring that the audits, which auditors produce, are indeed impartial enough to satisfy the public interest. What is expected of the accountancy profession in relation to the public is the safeguarding of interest of the stakeholders. These interests may consist of providing accurate financial information, ensuring it is of a uniform standard, organizational success and so on.

However, it is not necessary that an organizational culture or policies will prevent a management style, which may be unethical and against the integrity of the management. As a result, this issue gives rise to a serious concern of financial reporting, which involves corporate governance and transparency issues.

Discussion

Integrity and ethical values

The objectives of an organization and how to achieve them are based on different priorities, value judgments and management styles, which establish the norms of behavior. The public always expects more from an organization, which is why the rules of behavior go beyond law enforcement (Staubus 2005, Pp. 137-166). Integrity and ethical values ??are essential to control the environment and affect the design, administration and oversight of all elements of internal control. An ethical climate within the organization, at all levels is essential for their welfare, and influences the effectiveness of policies and control systems (Corvino 2002, Pp. 113-141).

Financial Reporting

The financial reporting incorporates the financial statements and documents, which pertain to the financial performance of the company. These documents may be prepared at the end of the accounting period, representing the financial and economic performance and activities of a company over a period (Donaldson 1999, Pp. 54-78). Financial reporting is essential, so that the public and owners of different companies can make effective decisions regarding the future operations and investments based on updated information. The information presented in the financial reporting incorporates the following (Barnett 2006, Pp. 107-124):

The administration can make effective decisions after the analysis of the performance, growth and development of the company during a given period.

The owners can determine the financial performance of the business in terms of profitability and other contributions.

Creditors can determine the company's liquidity and ensure that companies comply with their obligations.

Transparency in Financial Statements

Transparency means creating the conditions, which provide accurate information about the current situation, which are accessible and understandable to the market participants for the decision-making process (Agrawal 2005, Pp. 23-50). Disclosure refers to the process and methodology to provide information and notification of policy decisions through timely and transparent dissemination. Accountability means the obligation of market participants, including public authorities to justify their actions and policies, as well as take responsibility for their decisions and outcomes (Jackson 1997, Pp. 153-160).

Transparency is essential for the purpose of accountability for market participants, namely, borrowers and lenders, issuers, investors, government bodies and international financial institutions. Over the last decade, transparency and accountability have become a constant issue of debate pertaining to the representation ...