AUDITING

Auditing

[Name of the Institute]

Auditing

Question 1: Discuss how a company's stockholders (or potential stockholders) would use the information contained in an audit produced from an independent accounting firm.

The International Federation of Accountants (IFAC 2010) soundly defines the public interest as any individual or entity, which is affected, by the work of the accountancy profession: in other words, society as a whole. The company's stockholders or potential stockholders use the information from audit because of their interest. What is expected of the accountancy profession in relation to the stockholders is the safeguarding of interest (Kumar, 2005). These interests may consist of providing accurate financial information, ensuring it is of a uniform standard, organizational success and so on.

Thomadakis (an accountant) has a similar view in that the work of accountants needs to be both precise, and comparable in order to maintain and develop a robust economy. To the way in which statements are drawn up in one organization, is uniform in others, undoubtedly increases the need for precision and comparability to be of a reliable and virtuous nature. This is to enable healthy competition and allow outsiders to compare different organizations, with a standard gauge: it is this which is of public interest. It is the responsibility of auditors to provide a public service in verifying the accounts of organizations: the facilitation of financial markets depends on it.

It was observing that, accountancy was created into a profession, specifically in Scotland in the 19th century, due to selfish economic reasons. They justified that to be made into a single body would better enable them to carry out their effective service in the interests of the public. Now, however, in the modern day, accountants and their respective auditors have been subject to much criticism concerning the public interest or rather a lack of it. The implication ...