1.1 How does an expanded role of professional accountants affect the accounting profession?
The expanded role of professional accountants has affected the accounting profession, in that new opportunities have been created for the profession to extend the range of services it offers to business organisations and the public. With the enhancements of technology, global transactions and competition between accountancy firms, professional accountants now provide various consultancy engagements to maintain their competitive advantage. The expanded role of professional accountants has resulted in accountants carrying out tasks which may include risks, management, personnel, consulting, investment, controls and investigation.
Following recent significant corporate collapses and their relationship to auditors and accountants discharging their responsibilities, there have been spate of regulatory and profession reforms that are designed to restore confidence to both the public and the profession. The concept of audit independence is being examined critically in respect of its relevance and contribution to the public interest. The impact of the expanded role include:
Increased public scrutiny of the fees payable to and the independence of auditors; Increased opportunities for auditors and accountants to be involved in the management of businesses, with the increasing risks to independence. Increased government regulations and professional regulations regarding the tasks performed, quality control and scope of auditors’ work. Increased acceptance of the importance of auditor independence.
The Essay on Professional Ethics Professions Profession Accounting
Introduction Professions are an integral part of society. Their contributions have been regarded as indispensable. For generations, people have aspired to be professional, whether in the field of medicine, law, engineering, architecture or accounting, to name but a few. The logic of this aspiration is the higher social status, the respect of the general public and the greater wealth which ...
1.2 What role does ASIC have in the regulation of auditors?
ASIC has a significant role in the regulation of auditors. ASIC is the statutory administrative body for the enforcement of the Corporations Act 2001. Government regulation is exercised through ASIC’s surveillance program which involves the scrutiny of all aspects of the financial statements of listed and some non-listed Australian public companies. The objective of this surveillance program is supplemented by an auditors’ review program and a liquidators’ review program. ASIC has the following powers and influence over the regulation of auditors:
Registration by individuals, firms and companies as auditors; The audit inspection program enforced by the ASIC which covers the auditor rotation program, the policies and work practices of auditors; and Audit independence issues.
This statutory body also has the power to impose a penalty on registered auditor or liquidator if he/she is found to be guilty of failing to discharge duties properly. If the auditor is deemed to be not a fit and proper person, his/her registration can be cancelled or suspended, such as
bankruptcy.
1.3 What are the different types of audit activities that an auditor may perform? Discuss.
Audits are generally classified into different types of activities — financial statement, compliance, performance, comprehensive and environmental audits. Auditors may also be performing internal audit as an assurance engagement.
The objective of a financial statement audit is to enable the auditor to express an opinion as to whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework. The financial statement audit involves obtaining and evaluating evidence about an entity’s financial affairs so as to establish the degree of correspondence between the management’s assertions and the established criteria, such as legal requirements and accounting standards. This type of audit is performed by independent auditors appointed by the shareholders of the company, or by equivalent proprietors of non-incorporated entities whose statements are being audited. Auditors must be qualified and able to exercise their skills in an independent and objective manner. The nature and extent of the audit examination are provided in Part 2M.3, Division 3, Audit and Auditor’s Report, of the Corporations Act.
The Essay on Audit Postulates Financial Auditors Current
Mautz and Sharaf presented an interesting idea about the postulates of auditing. In their study, they stated that the postulates were the basis, the assumptions, and the starting point for building the auditing structure. My generalization about the postulates is as follows: In my opinion, the postulates were valid in 1961. This was because Mautz and Sharaf carefully conducted a study and ...
A compliance audit involves obtaining and evaluating evidence to determine whether certain financial or operating activities of an entity conform to specified conditions, rules or regulations. The established criteria in this type of audit may come from a variety of sources. Management, for example, may prescribe policies (or rules) pertaining to overtime work, participation in a superannuation plan, and conflict of interests. Compliance audits based on criteria established by management may be undertaken often during the year. Business enterprises, not-for-profit organisations, government units and individuals are required to prove compliance with many regulations. In many instances, the audit opinion issued under the requirements of the Corporations Act has elements of a compliance audit, where the auditor is
required to express an opinion on the company’s compliance with the provisions of the Corporations Act. Corporate and individual taxpayers comply with the Income Tax Assessment Act 1936 (Cwlth), as amended, in filling out their annual tax returns.
In the public sector, the term ‘regularity audit’ is used to denote an examination that reports on the legality and control of operations and the integrity of those dealing with public funds, including the expression of an opinion on an entity’s compliance with statutory requirements, rules, ordinances or directives that govern its activities.
A performance audit is an audit of all or part of an entity’s or entities’ activities to assess economy and/or efficiency and/or effectiveness. It involves obtaining and evaluating evidence about the efficiency, economy and effectiveness of an entity’s operating activities in relation to specified objectives. This type of audit activity can be undertaken in the private or public sector, by an internal or external auditor, or as an one-off project or an ongoing engagement. Sometimes performance audit may also be referred to as a value-for-money (VFM), operational or management audit. The term ‘performance audit’ is usually applied in the public sector, with some application in the private sector; the other terms are common to both private and public sectors. The Australian National Audit Office (ANAO) defines a performance audit as: an independent and systematic examination of an organisation, program or function for the purposes of: •forming an opinion about:
The Term Paper on Quality And Performance Management
1.1Introduction This essay discusses about one particular aspect of Value Chain Management, which is Quality and Performance Management, relates this to the theories put forward by the major Theorists also known as the “Quality Gurus” and interprets it from both a customer and a business process perspective. The subject matter we are going to consider is firstly the dimensions of quality, for both ...
–whether the organisation, program or function is being managed in an economical, efficient and effective manner; and –the adequacy of internal procedures for promoting and monitoring economy, efficiency and effectiveness; and •suggesting ways by which management practices, including procedures for monitoring performance, might be improved.
Comprehensive auditing occurs when an auditor undertakes a range of audit and related services for a client — a scenario that is more common in the public sector. A comprehensive audit encompasses the elements of a financial
statement audit, a compliance audit and a performance audit.
Environmental matters may have an impact on the financial statements. Some examples of environmental matters affecting financial statement accruals, the impairment of assets, disclosures or the basis of preparation include: •a pollution prevention system, of which the cost may be accrued for remediation costs •liability relating to transportation of, or contamination by, hazardous waste •the obsolescence of inventory due to environmental laws and regulations.
Auditors are required to carry out their environmental audit with an attitude of professional scepticism, recognising that the audit may reveal conditions and events that would lead to questioning whether the entity is complying with relevant environmental laws and regulations. The environmental audit is a recent trend and normally involves a review or an agreed-upon procedures engagement.
Internal audit is defined as an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
The Term Paper on Audit Exam
The understanding, and the letter, should include the auditor's responsibilities, including the fact that an audit is designed to provide only reasonable assurance of detecting material misstatements, and therefore may not necessarily detect all misstatements that exist. 5. Management representation letter. Management's statement that there have been no communications from regulatory agencies ...
1.4 How does the profession/government ensure that external company audits are performed at an appropriate level of quality?
Every profession is concerned about the quality of its services, and the public accounting profession is no exception. Quality audits are essential to ensure that the profession meets its responsibilities to clients, to the general public and to regulators who rely on independent auditors to maintain the credibility of financial information. To help assure quality audits, the profession and the regulators have developed a multilevel regulatory framework. This framework encompasses many of the activities of the private and public sector organisations associated with the profession.
For the purpose of describing the framework, these activities may be organised as follows: •Standard setting: The AUASB issues Standards, Guidance Notes and other guidances to provide clear standards for auditing and assurance services, and for review and other related services. The professional bodies and IFAC issue ethical codes to establish and monitor the performance of professionalism and ethical behaviour of professional accountants. •Firm regulation: Each public practice entity adopts policies and procedures to ensure that practising accountants adhere to professional standards. •Self- or peer regulation: The accounting profession has implemented a comprehensive program of self-regulation (including mandatory continuing professional education) and a program of quality control and practice reviews. •Government regulation: The FRC, ASIC and CALDB, along with the courts, courts monitor and regulate auditor independence and conduct.
The quality control standards help firms to achieve quality practice at firm and individual levels. The quality control standards include: Miscellaneous professional statements (APSs);
APES410 regarding conformity with auditing and assurance standards; and ASA220 (ISA220) which identifies the responsibilities of an engagement partner and engagement team in an audit engagement.
Firm regulation involves with the implementation of a system of quality control within firms. They typically include elements such as leadership responsibilities, ethical requirements, systems in acceptance and continuance of client relationships, proper allocation of human resources, control of engagement performance and monitoring and quality reviews.
The Essay on Audit vs Attestation vs Assurance
Audit Assurance services are broader in scope than either audit or attestation services. It is an independent professional service designed to improve the quality of information for the purpose of making better decisions. It evaluates the reliability, credibility, relevance, and timeliness of information. It assesses all the information and determines how accurate it all is. It provides ...
On the other hand, self-regulation is imposed by the professional bodies using certificate of practice, continuing professional education requirements, and reviews. In addition to these, the government practises overall surveillance through ASIC, with reference to the registration and monitoring of auditors by the CALDB.
1.5 Lindley LJ used the following sentence in the 1895 London and General Bank case. How would you describe the relevance of the auditor’s role in
present times? His business is to ascertain and state the true financial position of the company at the time of the audit, and his duty is confined to that…
The role of the auditor has changed considerably since the time of the London and General Bank case. These changes have been brought about by changes in statute and common law and by changes in community attitudes and expectations. The auditor’s role is still very relevant in terms of adding credibility to financial statements. Nowadays, auditors also offering a broader range of assurance services to satisfy the information needs of today’s users of financial information. Examples of this broader range of services include performance audits and environmental audits.
1.6 Discuss the different types of assurance which may be obtained in an assurance engagement.
Reasonable assurance engagement:
The objective of a reasonable assurance engagement is to reduce the assurance engagement risk to an acceptably low level, with the aim to arrive at a positive form of expression of conclusion. Limited assurance engagement:
Limited assurance engagement aims to reduce the assurance engagement risk to a level that is acceptable in the circumstances of the engagement but where that risk is greater than for a reasonable assurance engagement, as the basis for a negative form of expression of opinion. .
1.7 What are the limitations, if any, of a financial statement audit?
A financial statement audit is performed in accordance with ASA 200 Objective and General Principles Governing an Audit of a Financial Report. There are inherent limitations in any audit. These limitations include the use of testing, reliance on internal control structures, the possibility of collusion and the fact that most audit evidence is persuasive rather than conclusive. Regardless of the type of audit, a professional subjective judgement will be used in gathering and evaluating evidences and forming the
The Research paper on Financial Statements And Role Of External Audit
The nature of accounting is changing with specific demands in the market. Today, the SME clients require specific information and thus there have been a positivist-accounting approach while preparing accounting statements. One step in this positivist approach is where the general purpose financial statements are becoming deregulated and let market forces control the quality of the general purpose ...
relevant conclusion.
These inherent limitations also mean that the auditor cannot achieve a zero engagement risk. Therefore, an absolute assurance is not possible in a financial report audit.
1.8 An enhancing role of auditors has developed where the audit expertise is used widely to assist the client’s needs. What are your views concerning the role described, with particular reference to the appearance of audit independence?
The enhancing role described is a logical extension of the auditor’s traditional role, in order to meet the changing expectations of users of financial statements in recent years. Auditing has also progressed from a compliance role to a value-adding role to management and business. Along with increasing competition among firms and cost/efficiency pressure, auditors often provide consulting services to audit clients. Hence there is a blurring or relationship with clients.
The public confidence of audit independence had been in decline as a result of high profile corporate and audit failures, partly due to the wide range of services that were performed by the auditors involved in these cases, and partly due to the lack of effective corporate governance. However, legislators, the profession and the audit firms all have been working hard to push for reform to restore confidence, independence and integrity to the profession. Recent examples of significant reform to audit independence are: The enactment of Sarbanes-Oxley Act in US;
“Big Four” Firms such as KPMG and PriceWaterhouseCooper have separated their management consulting and assurance services by selling their consultancy arm to a third party; and A mandatory “cooling off” period for retiring partners joining the board of their audit clients and a mandatory rotation of engagement partners.
1.9 What is meant by a comprehensive audit? Should a comprehensive audit be
carried out by an independent auditor?
A comprehensive audit encompasses the elements of a financial report audit, a compliance audit and a performance audit. It is most commonly undertaken in the public sector through the office of the Auditor General. A comprehensive audit would normally be carried out by an independent auditor, in either the public sector or the private sector.
1.10 How do you think the corporate collapses have influenced the role of auditing in recent years?
The corporate collapses in US and Australia have had a fundamental impact to the role of auditing in recent years. Recent events have led closer public scrutiny on the role of the auditor, the audit independence and the methodology on how an audit is carrying out. That is, there is greater understanding the expectation gap between the public and the auditing profession and the acknowledgement by the profession that it needs to reduce this gap. Significant steps have been made to influence the enhancing role of auditor to that of a convergence role, which emphasizes the following: A clear objective to enhance and maintain the integrity of the profession; Clearly address the auditor interest to the public is as important as to the client, such as safeguarding independence by eliminating complex relationship with audit clients (i.e. limit to audit only); Reiterate ethical governance;
A clear distinction of audit and non-audit engagements carried out by auditor, this leads to legislation and self regulation being established to a ban on certain non-audit services for audit clients; Stronger regulation on auditors and audit firms as well as tougher enforcement on non-compliance; Return to a more rigorous audit of substantive matters, rather than limit to the testing of internal controls; Increasing the forensic nature of audit and stronger awareness of corporate fraud; Relate audit risks to business risk
Professional application questions
1.1 Audit objectives
Required
Discuss the current changes in the objectives of auditing, identifying the expanded roles of professional accountants and some of the reasons attributable to the changes.
The traditional audit role was a ‘conformance role’. Audits focussed on finding errors in balance sheet accounts and on stemming the growth of fraud. The detection of fraud had a very important emphasis. As companies began to grow and become more complex during the nineteenth century, the detection of fraud became an unrealistic objective – although it was still generally perceived as one of the main objectives of a financial report audit.
The difference in perception of responsibilities and reality were addressed in the case of Kingston Cotton Mill Co (1896) 2 Ch. D279. Lopes, LJ said of auditors: …He is a watchdog, but not a bloodhound…If there is anything calculated to excite suspicion, he should probe it to the bottom but, in the absence of anything of that kind, he is only bound to be reasonably cautious and careful…
This effectively stated that it is impossible to detect all fraud as part of the audit. Auditing standards place the following requirements on auditors:
The auditor should plan the audit to have a reasonable expectation of detecting material misstatements that have a material impact on the financial report (ie not all fraud).
The auditor should report any irregularities (including fraud) even if the effect on the financial report is expected to be immaterial.
In conclusion, the primary objective of an audit is to express an opinion as to whether the financial report is prepared, in all material respects, in accordance with an identified financial reporting framework. The objective
to detect fraud is in the context of the auditor’s opinion.
Also in recent years, the role of the auditor has expanded to meet the changing expectations of users of financial statements. This expanded role is evidenced by the wide range of assurance services now offered by auditors.
1.2 Independence
Required
Based on the series of accounting crisis and corporate collapses in the early 2000s, discuss the importance of maintaining independence by an auditor.
Audit Independence is the cornerstone of auditing. Independence is the essence that underlies the success and credibility of the accounting profession and its service to the public. Maintaining independence allows the auditing and accounting profession to be self-regulated, a highly prestigious character. This objectivity permits the profession to perform its attestation and monitoring functions effectively. Independence is also a key component of the agency theory of auditing. In the management /shareholder agency relationship it is important that the monitoring function (audit) is and is seen to be separate from management, for it to be a ‘value added’ service.
1.3 Standard setting
Required
a. Comment on an auditor’s ability and methods in attesting the credibility of financial statements prepared by the governing party of an organisation.
Due to formal training and experience, the auditor has the ability, credibility and authority under Corporations Law, to undertake attestation of financial statements. At minimum, an auditor who carries out an audit must be a current registered member of CPA Australia and ICAA. In accordance with the requirements laid down in the various Auditing Standards, the auditor plans the nature, timing and extent of procedures to be followed to
arrive at a positive expression of an opinion under the requirements of ASA 200 and ASA 220.
b. Explain what type of assurance an auditor should provide in a financial statements audit.
A financial statements audit is one that expresses an opinion on written assertions and thus the audit level of assurance is expressed as a positive opinion. The financial statement audit provide a reasonable level of assurance which enhances the credibility of the information provided by the party responsible for the matter, such as in the audit report on financial statements under the Corporations Act 2001. While the assurance of the financial statement audit is objective, it is subject to a number of inherent limitations. Some of these limitations include time lapse, audit testing based on selective samples, a subjective assessment of materiality, and that where there are highly specialised areas, the auditors may need to seek external advice regarding the subject matter being audited.
1.4 Regulatory framework
Required
a) One component of this framework is the oversight ability of the FRC. Identify the type of work that is performed by the FRC which aims to enhance the quality and independence of professional services
Section 225 of the Corporate Law Economic Reform Program Act 1999 lists the function of the FRC. They include:
i) Overseeing the setting of accounting standards in Australia; ii) Appointing members of the AASB other than the chair;
iii) Giving directions to the AASB on matters of general policy and procedures; iv) Monitoring the operation of accounting standards to assess their continued relevance and effectiveness in achieving their objectives; v) Monitoring the effectiveness of auditor independence requirements in Australia; vi) Reporting to the minister and giving advice about continuing
steps to enhance auditor independence; and vii) Monitoring disciplinary procedures of accounting bodies.
The FRC’s role in respect of auditor independence is concerned mainly with establishing arrangements needed for monitoring the effectiveness of auditor independence requirements on an ongoing basis.
b) Discuss your views of the effectiveness of the latest regulatory system
This part of the solutions may include the present state of cost incurred by firms in ensuring compliance, the lack of ethical training in the past which may result in the lack of an effective approach to address audit failures, and the general market condition of the profession (skills shortage, comparability of demand and supply, etc.)
1.5 Organisations associated with the profession
Required
Indicate the organisation or organisations associated with each activity.
1. CPA Australia and ICAA
2. Financial Reporting Council and the Australian Accounting Standards Board (AASB) 3. Auditing and Assurance Standards Board (AUASB)
4. ASX (Australian Stock Exchange)
5. CPA Australia and ICAA
6. CPA Australia and ICAA
7. AUASB
8. Auditors and Liquidators Disciplinary Board
9. Public Sector Accounting Standards Board
10. AUASB
11. ASIC
12. AASB
1.6 (Types of assurance)
Required
Indicate the type of assurance for each of the activities
Number
Type of assurance
1
No assurance (non audit engagement)
2
No assurance (non audit engagement)
3
Moderate assurance (full audit cannot be achieved due to the nature of the prospectus i.e. estimate amounts) 4
No assurance (agreed upon procedures and the auditor is required to present actual findings) 5
No assurance (agreed upon procedures and the auditor require to present actual findings)
1.7 Internal and external audit
Required
Compare and contrast these two positions in a tabular format under the headings of independence, nature of work, quality standards, legislation, and professional status.
Internal auditor
Independent auditor
Independence
Employees of the organisation; conducting independent appraisal within the organisation External professionals engaged by the organisation to conduct the audit and issue a opinion; must not be an employee or having financial dealings with the audited organisation i.e. holding shares Nature or work
Internal systems and controls review, checking, forensic (including fraud) investigations, internal appraisals, consultation to senior management, business and financial planning and even financial statement audit Internal systems and controls review, conducting financial statement audit (including
testing on the nature and the integrity of material transactions), forensic investigations (if needed), management consulting, etc. Quality standards
As set out by the management; also comply with professional standards as set out by ICAA/CPA/IIA; also complying with relevant auditing and accounting standards As set out by terms of engagement; also comply with the audit firm’s standards. Must comply to professional standards as set out by AUASB and AASB; the audit must be conducted in accordance with relevant standards. Legislation
Generally no legislation
Must be registered with ASIC in order to conduct audits; Auditors must act within the guideline of Corporations Act Professional status
Can be a member of IIA or other professional bodies (including ICAA/CPA) Must be a member of ICAA/ CPA or equivalent professional accounting bodies; can also be a member of IIA
1.8 Audit management and quality issues
Required
Set out the headings for material that would need to be contained in a staff audit manual, incorporating the key principles and quality control procedures discussed in this chapter
Key principles:
Integrity;
Objectivity;
Independence;
Confidentiality
Technical & professional standards;
Competency & Due Care; and
Ethical behaviour
Quality control procedures :
On-the-job-training and experience;
Professional requirements;
Assignment
Continuous professional education; including professional qualification; Supervision and delegation;
Checklists and monitoring;
Regular staff appraisals;
Progression and rewards;
Staff counselling; and
Professional relationships with clients (including prohibitions of having financial interest with audit clients) and disclosure of relationship with clients
Case studies
1.1 Regulatory framework
Required
You are the newly appointed audit lecturer in an Australian University. Explain the significance in applying international auditing standards in the Australian context and what has been done.
Significance of applying international auditing standards
The importance of international accounting standards to enhance consistency in communicating and measuring financial performance in global markets; The application of international auditing standards will ensure that standards and quality of information used as investment decisions are reliable, and are expressed using generally acceptable international standards; The transferability of accounting and auditing services across multinational corporations; The approach adopted by governments to ensure the integrity of the capital market and information.
1.2 Quality control and ethics
Required
a. Explain whether Mr. Skate has breached any of the quality control guidelines outlined in ASA 220 (IAS 220) and APES 320.
ASA 220 and APES 320 detail the mandatory requirements regarding quality control procedures for audits of historical financial information, including an audit of a financial report. Mr Skate has breached : a) Professional Independence
The fixed fee, bonus and very limited time frame for the completion of the audit will cause potential problems with respect to both actual and perceived independence. b) Employment
Lack of information from the facts presented.
c) Assignment of Personnel to Engagements
The graduate does not have adequate experience to perform an audit. The graduate who is in the tax section may not have received sufficient training to undertake an audit assignment. d) Supervision
There appears to be no supervision of the work of Thomas. He has been left to complete the audit by himself. The only review seems to be of the inadequate financial statements and not of the work papers. e) Guidance and Assistance
The only guidance was in the initial hour of briefing given to Thomas. This was also quite flawed as Thomas was told that he should not test controls. Controls should be at least ‘reviewed’ as part of every audit. Only substantiating unusual balances is also an inadequate approach. f) Client Evaluation
There appears to be no evaluation of this client before the acceptance of the engagement. g) Allocation of Administrative and Technical Responsibilities Lack of information from the facts presented
.
b. Discuss any ethical issues raised in this case study.
There is a lack of appearance of independence.
The bonus would be prohibited under the Code of Ethics for Professional Accountants. Staff appointed to do the audit lack competence. The audit partner has not complied with auditing standards.
Ethical Issues are:
Lack of independence;
Lack of audit competence;
Inappropriate support and supervision given to the audit team; Risk of inappropriate audit opinion.
Research question
The question requires the student to critically examine the relationships of the auditor with users of financial statements and the regulatory regime. Students should consult literature to identify the role of auditors over the last decade, what have been changed and why. Furthermore, students should project the present situation faced by the audit profession and how the profession respond to such changes. Finally students are asked to provide their own perceptions of the different conformance, enhancing and converging roles discussed in the chapter.
The format of the essay should cover:
(a) How the auditors’ relationships with clients, users and the general public have changed over the last decade, identifying some of the factors which caused such changes: The traditional responsibility of the auditor: a function providing an independent assurance to users of financial statements regarding the truth and fairness of financial statements. Some theoretical underpinning such as Agency theory should be discussed. Reliance by the users of financial statements upon the auditor was subject to the interpretation of the laws, and professional judgement and reasonable care exercised by the auditors, the self-regulatory regime, explanation of the conformance role; The widening of the expectation gaps where the expectations of users compared with those of the profession and the regulatory regime;
Economic factors which led to the growth of competition, the advancement of technology and the development of audit skills to encompass a consulting role for clients, the emergence of an enhancing role undertaken by auditors; The risks of loss of audit independence due to close relationships between the auditor and the clients, the response of the audit profession; Corporate collapses, the liability crisis that followed some audit failures, the deep pocket theory and the gradual erosion of credibility; Governmental intervention, credibility crisis and the implosion of audit firms, and the development of a convergence role. Some possible factors of the change: failure of the legal regime in capturing the complexity of the role of auditors; economic changes leading to competition amongst audit firms; lack of ethical training in professional education; failure of effective self-regulation by the profession, etc.
(b) Possible impact of these changes on the work of auditors in the future: Increase in audit fees;
Rigorous audit quality control practices;
Auditors’ increasing caution in dealing with clients’ business; Heightened indemnity insurance premiums;
Audit Profession embarking into extensive ‘regaining credibility’ campaign Some audit firms’ inability to sustain without consulting services; Change in audit landscape between different tiers due to the limitation of non-audit services and clients’ minimising risks of problematic audit experience.
(c) Whether auditors should perform a conformance role, an enhancing role or a converging role.
This part of the answer demands good comprehension by students, and their insights gained as to the development of the audit profession in the past, with projections of the future.
Resources should include but not limited to:
IFAC’s 2003 July Research study on ‘Rebuilding the confidence of Financial
Reporting’ and subsequent studies of the global profession. Audit firms’ fees structure – changes over the years
Audit expectation gap literature
Audit liability literature and
Latest legislation regarding the audit profession including CLERP 9 Act and the PM.
