Question

Despite the adoption of International Standards   for   the   Professional   Practice of Internal Auditing on how audits should be carried out many corporates have continued to face scandals one after the other. Discuss the reasons that have led to this and suggest what should be done to correct the situation.

Answer 1

Many corporate have continuously faced various kinds of scandals one after the other even adaptation of International standard for professional Finance because-

A. Various countries have different regulatory authorities and they are not able to control with the complete control on the books of accounts.

B. international accounting standard are offering with guidelines to provide for recording of transactions is many countries and in many countries they are not mandatory

C. there is a very high risk related to integrity of the board of Management and these integrity this cannot be changed

D. there is a risk related to maximization of the overall profits in order to save their own interest

E. There is also a risk related to lack of internal control in the business which cannot be changed through adaptation of the internal control

F. There is also a risk related to continued shareholders pressure to report higher profit which can be resulting into maximization of the shareholders value.