Quality of Capital Market Accountant †Free Samples to Students

Question: Discuss about the Quality of Capital Market Accountant. Answer: Introduction: During the process of audit evaluation, the auditors are responsible for making best use of the selected auditing standards. The independence of the auditor is denoted in terms of the freedom which is exercised either internally or externally from the parties who have financial interest in a company audited with fair techniques. In addition to this, the integrity and the objective approaches together signify the independence of the overall audit process. Hence, the independence of the auditors from the clients needs to be avoided from any effect on the audit opinion with formation of relationship. The auditors are further required to provide professional and impartial judgement on the financials to the stakeholders (Nasution and stermark 2013). The auditors are seen to exercise services which are outside the scope of clients domain. These services are known as non-audit services. The services are considered as those management services which are responsible for promotion of clients business and tax associated services. The rationale for providing these services has been identified in terms of making nonmonetary benefits are various types of other additional earnings. In addition to this, the aforementioned services are seen to result in the independence impairment associated to the auditors while providing of the services to the clients (Clout, Chapple and Gandhi 2013). It needs to be further understood that the quality of audit is identified as significant complexity. This is due to the criticisms which are often drawn from the stakeholders and the regulators. On the other hand, advocacy is seen to be significant threat to the auditors which is highly dependent on a specific set of scenario. Advocacy is for the scene to denote the situation they are auditory scene to provide the judgement but based on a common perception it is assumed that the quality of audit has been compromised. It has been further observed that the quality of ethics is seen to be inherent when an auditor is seen to provide advocacy services. This is further seen to cause negative influence in the independence of the auditor (Rahmina and Agoes 2014). In this particular situation, the auditors independence has been seen to be a huge threat for accepting the auditors either nonmonetary or monetary benefits apart from audit fees. The auditor may also be seen to be availing several types of other benefits which have not been mentioned during the process of audit engagement. This influences the auditors independence. With relevance to the particular case, the member of the audit firm has been seen to be offering vouchers for holiday package (Causholli, Chambers and Payne 2015). In case the offer is accepted it is seen to be leading to a situation where the audit firm may accept nonmonetary benefits thereby affecting its independence. Hence in case of availability of various steps of other benefits which are seen to be restricted are soughed, the threat of auditors independence rises at the same pace (Christina Chiang 2016). As per the aforementioned situation, the dependent, independent, spouse and the siblings are considered as close family members of the auditors. It has an further seen that the financial interests constitutes the various types of short-term as well as long-term securities, guarantees of debt and ownership which is owned on behalf of individual in relation to other individuals or through various types of other intermediaries. It is seen to be inherent when an individual is seen to involve and supervise the various types of undertakings of decisions regarding investment and controlling the intermediary. As per the given situation in the case study, the father of the accountants father is identified as a financial controller of a particular business. Henceforth, if Michael decides to be a part of the audit team by accepting the proposal shall, the auditors independence would be endangered (Fiolleau et al. 2013). Based on the given scenario, the close association is seen to be inherent among the staff, officer, director and the clients are seen to be affected by the risk to alignment with business environment of the client. Furthermore, in most of the situation there is a thread to the auditor for being over sympathetic or overly associated with the client. Hence, the close association with the client would mean a greater trust level along with data representation in an appropriate manner. It has been further observed that the auditors have the appropriate information of the client to the engagement in a previous assignment with LTH, which took place a month ago. It is the responsibility of the auditors to include the various components of tax evaluations after the entries are passed for the relevant accounting period ended 30th June 2015. Therefore, the auditing of personal work is not seen to be visible for an auditor (Dogui, Boiral and Gendron 2013). In several situations, the clients are often seen to receive restricted services on behalf of the auditors. This is seen to result in compromise with the independence in later on situations. Hence, there needs to be enforcement of some particular measures for maximisation of the independence of auditors and the implementations of these measures have been listed below as follows: The rotation of the audit partner is seen to be a significant procedure which needs to be adopted for intensifying the overall auditors independence process. This further implies that such major will result in eradication of the threat from the knowledge along with various types of self-centredness. This is due to the fact that it would encourage the independence feature with no additional substantial cost. Furthermore, the availability of institutional knowledge and historical knowledge needs to be ensured amongst the members of the team for ensuring the maintenance of effective quality of audit (Irmawan, Hudaib and Haniffa 2013). The establishment of an effective audit committee seen to be a necessary procedure for ensuring greater transparency level. This is seen to function as a superlative measure for maintaining the independence of the auditor in a most appropriate manner. The qualification of the audit team needs to be done by fetching them with the necessary resources. This would result in an easy assessment of independence and objectivity leading to future outcomes which needs to be provided with the stakeholders. It has been further observed that an independent auditor needs to maintain, regulate and contribute to the audit quality. One of the most necessary features is seen with effectual auditor oversight by consideration of independence, from political interference and audit profession. Henceforth, the transparency needs to be maintained for depiction of accurate and fair value of the financial statements along with sharing of the restricted data (Dart and Chandler 2013). An auditor is required to follow the standards of ethics which are related to ethics code and auditing standards during conduction of the audit work. In addition to this, the auditors need to follow a global set of rules for ensuring higher ethical standards and greater quality independence for minimising of the various types of issues and provide procedures for the auditing (Ratzinger-Sakel 2013). In this section, the risk of the management is described to have a significant cost it went to handle the inventory associated to spare parts. However, in most of the cases the execution of stock management is seen to be done in an immensely poor manner. Furthermore, the organisations are seen to take into consideration the factors associated to risk management, year the race has been analysed and measured for minimising the risk to highest level possible. The major risks are often seen in terms of reputational risk, commercial risk and risk associated to health and safety. The financial loss is resulted from downtime risk, here the organisations could not implement the technology which are in association with the risk management of the equipment and spare parts while conducting the audit planning. Some of the main form of risk has been considered in form of strategy and operational risks (Mostafa, Magda and Habib 20013). The various types of operational risk are seen to be a result of the operational downtime. In addition to this, this risk has been related to the significant approach based on level of execution. Hence, the business organisations need to develop an approach of strategic management in case of failure related to the effective execution. They need to further ensure enforcement of policy associated to stocking when taking decisions regarding standardisation. The organisations are seen to manage operational risk for ensuring rightful enforcement approach and inventory management is an effective way. The risk management procedure is essential for detection of feasible approach to rectify the practices (Arya and Glover 2014). Strategic risk is identified as another risk which is not related the trade approach and choosing of the organisation which decides for right or wrong products. Hence specific risk is seen to consider inventory management associated to spare parts, they are organisation manages the same in an effective fashion. The business concerns are seen to choose ad hoc facilities where there is absence of definite policies. This is done by recruiting professional managers were seen to provide regular procedural complexities and take part in active judgement. The spare parts elections should be standardised with activities related to financial management (Blay and Geiger 2013). The business organisations need to manage stock as well as level of risk to potential loss. They are seen to act were to conduct the extended downtime experience and the losses which are associated to manage the risks by purchasing large quantity of spare parts. Henceforth, implementation of ad hoc strategy is seen to be an essential component. Although it needs to be noted that the extended downtime and increase stock investments cannot be afforded and the company needs to find alternative way to mitigate possible losses appropriately (Tepalagul and Lin 2015). This section discusses the inherent risk which is seen as the associated risk. The occurrence of these risks is seen due to error in the omission owing to factor or financial statement rather than control failure. Moreover, the nature of the transaction is seen to be highly judgemental and complex for financial anticipation and the risks which are likely to occur in future. The risk associations in the balance of stock are seen to effect largely on the amount of accounts receivable. Hence, is that a situation the transaction are seen to be related to the inherent risks such as stock management. Therefore, it is seen to have a substantial impact on the accounting balance depending on the specific class of transactions (Naiker, Sharma and Sharma 2013). The risk associations are for the seen to be numerous while rejection of the operational risk. In addition to this, there is a scope that the auditor might not be able to highlight the misstated figures in the financial statement of the company. In this particular aspect, the organisation is seen to carry out the evaluation along with the procedure of substantive test for future requirements. Due to this, the risk detection is considered a something where auditor needs to infer the absence of any significant error during the time of enforcing the audit report. In this kind of risk, the auditor expects enforcing the balances of accounting and evaluation of the content. In addition to this, the influences of the balances of accounting are based on providing transactions and the amount involved in the same time. Therefore, there is a scope of majority of the accountants aligning with such risk. This risk is further associated to sales account, but his account, inventory account and revenue account (Dogui, Boiral and Heras-Saizarbitoria 2014). References: Arya, A. and Glover, J. (2014) Auditor Independence Revisited, Journal of Accounting, Auditing Finance, 29(2), pp. 188198. doi: 10.1177/0148558X13519989. Blay, A. 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(2013) Client employment of previous auditors: shareholders views on auditor independence, ACCOUNTING AND BUSINESS RESEARCH, 43(3), pp. 205224. doi: 10.1080/00014788.2012.707968. Dogui, K., Boiral, O. and Gendron, Y. (2013) ISO auditing and the construction of trust in auditor independence, Accounting, Auditing Accountability Journal, 26(8), pp. 12791305. doi: 10.1108/AAAJ-03-2013-1264. Dogui, K., Boiral, O. and Heras-Saizarbitoria, I. (2014) Audit fees and auditor independence: The case of ISO 14001 certification, International Journal of Auditing, 18(1), pp. 1426. doi: 10.1111/ijau.12008. Fiolleau, K., Hoang, K., Jamal, K. and Sunder, S. (2013) How do regulatory reforms to enhance auditor independence work in practice?, Contemporary Accounting Research, 30(3), pp. 864890. doi: 10.1111/1911-3846.12004. Irmawan, Y., Hudaib, M. and Haniffa, R. (2013) Exploring the perceptions of auditor independence in Indonesia, Journal of Islamic Accounting and Business Research. doi: 10.1108/JIABR-09-2012-0061. Mostafa, D., Magda, M. and Habib, H. (20013) Auditor independence, audit quality and the mandatory auditor rotation in Egypt, Education, Business and Society: Contemporary Middle Eastern Issues, 6(2), pp. 116144. doi: 10.1108/EBS-07-2012-0035. Naiker, V., Sharma, D. S. and Sharma, V. D. (2013) Do former audit firm partners on audit committees procure greater nonaudit services from the auditor?, Accounting Review, 88(1), pp. 297326. doi: 10.2308/accr-50271. Nasution, D. and stermark, R. (2013) Auditor fee dependence, auditor tenure, and auditor independence: The case of Finland, International Journal of Accounting, Auditing and Performance Evaluation, 9(3), pp. 224246. doi: 10.1504/IJAAPE.2013.055895. Rahmina, L. Y. and Agoes, S. (2014) Influence of Auditor Independence, Audit Tenure, and Audit Fee on Audit Quality of Members of Capital Market Accountant Forum in Indonesia, Procedia - Social and Behavioral Sciences, 164(August), pp. 324331. doi: 10.1016/j.sbspro.2014.11.083. Ratzinger-Sakel, N. V. S. (2013) Auditor fees and auditor independence-evidence from going concern reporting decisions in Germany, Auditing, 32(4), pp. 129168. doi: 10.2308/ajpt-50532. Tepalagul, N. and Lin, L. (2015) Auditor Independence and Audit Quality: A Literature Review, Journal of Accounting, Auditing Finance, 30(1), pp. 101121. doi: 10.1177/0148558X14544505.