Question

What do you believe is the current level of risk associated with accountants and auditors today?

Answer 1

Associated with accountants

1. Unqualified Accountants

No regulatory laws in place, unlike solicitors and doctors, anyone is free to call themselves an accountant without any form of training. It’s not until they pass qualification exams and join a professional body that they become subject to any kind of professional conduct rules.

2. Online technologies

The advent of new online technologies and a mobile internet culture has seen a proliferation in the number of cloud-based accountancy software.

3. Firms Consolidation

With rising costs in all sectors, reducing overheads and expenses, sharing resources and expanding offerings to provide a more diverse selection of services to clients does make some sense. There are many in the accounting industry who would argue that firm consolidation is actually a solution to problems facing a number of accountants.

Audit Risk

Audit risk is the chance that the auditor will issue a clean audit opinion, stating that the financial statements are free of material misstatement, when, in fact, they are not. Audit risk is a combination of inherent risk, control risk and detection risk and the combination of the four types of risk are known as the audit risk model. This model has an important implication for auditors. Because auditors can only control detection risk, because inherent risk and control risk are the responsibilities of management, the audit risk models shows that as an auditor wishes to keep audit risk low, his only recourse is to reduce detection risk by increasing audit procedures or reducing tolerable misstatement.