The last 13 weeks have been a highly educational experience in regards to the current class. This module has been concentrated on the essential elements of auditing and its role within the economic system of the United States. First of all, I have been fascinated by the depth of the discipline and its indispensable role in business processes. Whittington and Pany (2018) introduce the general principles of auditing as a professional area that encompasses a variety of services. In recent years, the demand for high-quality auditing has been on an increase for a combination of reasons. In the increasingly competitive environment, firms seek to optimize their financial effectiveness. This discipline provides them with insight into the state of the business, highlighting strong points and weaknesses. At the same time, the global financial crisis of 2008 became a major lesson for the community. Following its damaging impact, businesses have been devoting increased attention to the accuracy of the data. Adequate assessments have acquired additional value in the post-crisis area, making accounting more in demand, while contributing to the regulatory policies in the sphere.
A particular emphasis is laid on the professional standards and ethics of public accounting. The discipline places serious responsibilities on auditors who are expected to behave in a professional, unbiased manner. More specifically, one of the key roles of auditors dictates the indispensable nature of misstatement detection and reporting. As per the essence of the profession, firms’ financial data should remain accurate and transparent. Otherwise, stakeholders would not possess correct information, which, in turn, would create unrealistic perceptions of the business’s performance. Such instances are damaging for the national economy, as they undermine its health and contribute to the development of serious crises, such as the one of 2008. This crucial role is fixed not only by the ethical standards but also in the form of legal liabilities. Auditors are subject to serious legal implications due to the financial amounts and the number of parties involved in the professional activity. The losses may be significant, and accounting firms are associated with serious budgets, prompting the judicial system to harsh verdicts (Whittington & Pany, 2018). Accordingly, the repercussions of negligence and contract violations may be particularly difficult.
Under these circumstances, the process of professional auditing remains complex and demanding. Whittington and Pany (2018) emphasize the importance of planning and communication within the professional sphere, as these factors enable quality and precision. The planning process comprises discussion not only with the client but also with the previous auditors who may provide valuable information. Such a communication helps establish a better understanding of the management’s integrity. In addition, the change of auditors is a serious step, which is why it is important to understand the reasons behind such a decision.
Throughout the initial steps, the management is expected to remain cooperative and clear. In certain cases, executives may be willing to share incorrect financial data with the public. The primary impetus to such actions is created by the desire to conceal the company’s problems and attract the desired investments in the short term. Within healthy business procedures, shareholders need to understand what assets they can reasonably have a claim to, meaning that the balance of equity and liabilities is a key area on the balance sheets. Through the correct sampling and analysis methods, auditors are to ensure that the company’s management fulfills its obligations. This way, auditing contributes to the proper functioning of the country’s economy and prevents crises of considerable magnitudes through integrity, professionalism, and precision.
Reference
Whittington, R., & Pany, K. (2018). Principles of auditing & other assurance services (21st ed.). McGraw-Hill Education.