Question

Based upon the readings and the videos in this module, select one of the following questions to respond to for this module for your initial response. Try to pick a question of personal and/or of professional interest to you. Copy and paste the question you select in bold type as part of your initial response so that everyone can see your question choice.

Discuss the potential view that the costs of establishing and maintaining accounting standards enforcement bodies in every country around the world are likely, in most countries, to exceed the benefits. Why have several countries around the world recently introduced auditor oversight bodies? In your opinion, is this a positive or a negative development for the respective country capital markets and for the respective country auditing profession? Be specific.

Is it necessary to have a set of International Auditing Standards? Would it be better if the International Accounting Standards were allowed to be set by or be based upon U.S. auditing standards? Or perhaps International Auditing Standards should be set by the United Nations? In your opinion, is it perhaps easier for the world to reach an agreement on International Auditing Standards than it is for the world to reach an agreement on International Accounting Standards? Why or why not for each of the above individual questions? Be specific.

Be sure to support your statements with logic, arguments, and examples

Answer 1

Why have several countries around the world recently introduced auditor oversight bodies?

Audit Oversight bodies came in force to promote and develop an effective audit oversight framework and to promote confidence in the quality and reliability of financial statements.

In the Financial Reporting Environment, External Auditors play a key role in providing quality and efficient audits in order to uphold public confidence and develop a stronger image of the company or the enterprise. Many standards and policies have been developed by the International Bodies to maintain the quality practices of the Audit. To help in developing a proper system of Audit, Audit oversight functions have been introduced so as to reduce the possibility of any frauds and misappropriations in the financial reporting system of the company or an enterprise. Many countries across the globe have taken up the activity of Audit oversight mechanism to ensure transparency in the disclosure and reporting of Audit Firms like (USA, Singapore, Japan, Australia and UK)

External Auditors play a key Audit role in gaining investors confidence relation to the integrity of the financial information reported. Though it is the primary responsibility of the management to provide the Audior with the correct documents and since auditor cannot be the blood hound but a watch dog in the process of reviewing the documents, complete scrutiny of the financial reports of the company or the enterprise is not possible by the Auditor, but the Auditor has to try his 100% to provide a report which is true and fair and also free from frauds and errors. Auditors act as agents for the shareholders in determining whether the management has provided a complete and proper information and whether its books shows a proper picture.

For Example, to ensure that the accounting scandals such as Enron, Worldcom and Parmalat do not repeat again in the future, it is very important for the countries to develop an oversight body so that the shareholders do not loose their confidence in the companies and they keep investing more and more in different countries which will ensure the economy is working and the money is properly circulating in the Economy.

To conclude, such oversight bodies will ensure a proper financial reporting system since the accounts will be properly audited and frauds will be timely detected and if these things are ensured then the Investors will have their trust in the companies and would like to circulate their funds more and more through the Economy.