The reading assignment this week focused on “audit quality” and discussed variou

Question

The reading assignment this week focused on “audit quality” and discussed various culture, skills, and effectiveness points with respect to audits generally. The text discusses factors that are outside of the auditor’s control with respect to audit quality. Please respond to all of the following prompts in one combined main response:

In your opinion, who is the greatest beneficiary of the audit and why? (Examples may include investors, creditors, the company itself, potential employees, etc.)

Can the quality of an audit always be assured? Why or why not? What might interfere with audit quality?

Do you agree with the notion that there are factors outside of the auditor’s control that affect the quality of the auditor’s work, and why or why not? Is that acceptable? Should that be made clearer to investors or other users of audit reports?

Explanation / Answer

Solution:-

1. In your opinion, who is the greatest beneficiary of the audit and why? (Examples may include investors, creditors, the company itself, potential employees, etc.):-

In my opinion the greatest beneficiary of an audit is the general public. When these companies try to hide profits and losses they are deceiving the government by not paying the taxes they should be paying, and that in turn hurts the general public. The more audits that are performed to help prevent these fraudulent activities subside, the better it is for everyone involved.

2. Can the quality of an audit always be assured? Why or why not? What might interfere with audit quality:-

The quality of an audit is not always assured, because the person or persons performing the audit may not be educated enough on what to look for. The auditor may not hold professional skepticism. The auditor may not test the appropriate controls being used by the company to make sure they are in place and functioning properly. There are many things that can interfere with an audit quality. One of the biggest interferences with an audit quality is that management does not comply with the audit.

3. Do you agree with the notion that there are factors outside of the auditor’s control that affect the quality of the auditor’s work, and why or why not? Is that acceptable? Should that be made clearer to investors or other users of audit reports:-

Yes, I do think that there are some things that are out of the auditor’s control. These things can be uncooperative customers, management, suppliers, employees, and many more. These people can interfere with the audit so that the fraudulent activities that are taking place will not be noticed. No, this is not an acceptable behavior, and this needs to be stated in the auditor’s report, reported to the Board of the company, and reported to the Securities and Exchange Commission.

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