ETHICS VERSUS RULES IN AUDITING

Ethics Versus Rules in Auditing

Ethics Versus Rules in Auditing

Introduction

It is somewhat difficult to give a single and precise definition of the term 'audit'. Many well known authors have defined it, and everyone of them has attempted to highlight one aspect or the other. For the purpose, of our understanding of the subject, we may refer to of the definition of audit given by different authorities on the subject: “An audit is an examination of accounting records undertaken with a view to establishing whether they correctly and completely reflect the transaction to which they purport to relate.” The information that audit represents is an essential component of the audit. Through it, there is an evaluation for an information system achieves its goal for which it was adopted. From this point of view, there exist standards, in organizational culture, which define clearly the domain, activities, levels and content of the audit and the finalization forms (Barlas, 2008, Pg # 34).

Description & Analysis

Description & Analysis By complying with the requirements of standards, the result of the information audit process is unbound from contesting risks. The competitive intelligence of information audit represents an ample domain which includes all auditing activities for specifications, projects, and software, and data basis, processes specific to the life-cycles of a program, of an information application, of an information system for the management and a portal of maximum complexity, associated to a virtual organization. It is an independent verification of financial statements for the reliability of information.

Essential Characteristics of Auditing

From the foregoing discussion, it is clear that:

Audit is an independent, scientific, intelligent and critical examination of the books of account or accounting records of a business.

Such examination enables the auditor to satisfy himself that the balance sheet and the profit and loss account are properly drawn up, and the account exhibits a true and fair view of the financial state of affairs of the business for the accounting period.

In order to report on the financial health of the business, the auditor has to go through vouchers and other related documentary evidence (both internal as well as external).

The auditor has to satisfy himself about the correctness, authenticity, and reliability of accounting information and submit his report accordingly. (Arel, 2010, Pg # 170)

Ethics in Audit

There are nine sections of ethical audit:

Behavioral model of the auditor and audit firm.

Conclusion of a contract to provide professional services.

Conflict of interest.

A second opinion.

The fees and other emoluments.

Advertising and offering professional services.

Gifts and favors.

Applying the principle of fairness for all types of services.

Applying the principle of independence in the tasks to validate the information.

The first part identifies the key principles of professional ethics of auditors and guidelines for their application, made in the use of behaviors of the auditor and audit firm. Application of behavior reveals the possibility of violation of basic principles, to assess their seriousness, and if necessary, take precautionary measures (Gowthorpe, 1998, ...