Auditing Essay Example | Topics and Well Written Essays - 750 words - 9

Auditing - Essay Example Correspondingly, this essay intends to evaluate and explain the newly elected treasurer, Mr. Kristos about what was right and what was wrong in the above action. External auditor is appointed to conduct audit on behalf of the shareholders of the audited organisation. External auditor serves as proxy for the shareholders and thus, primarily requires the external auditor to be independent of the management of the audited organisation. Notably, auditing standard requires independence in terms of mind as well as appearances (Mihret et al., 2011: Cheung & Hay, 2004). Although, external auditor is nominated for the advantage of shareholders but the shareholders are rarely accountable for the appointment as well as removal process of external auditor. Correspondingly, management is accountable for hiring external auditor while shareholders are rarely offered with the choice to hire external auditor. Similar practice can be related with the action of Mr. Kristos where he has dismissed audit firm on his sole discretion. It is extremely crucial that nominated external auditor must be able to identify deficiencies during the audit and must be able to q uestion the audited organisation based on the findings derived from the audit process. Such deficiencies are firmly related to internal control, unfair or misleading financial reporting and accounting policies or standards adopted by the audited organisation. In general practice, the external auditors are engaged in various interactions with the management of the audited organisation. Notably, such interaction for a long time tends to the emergence of special relationships between the management of the audited organisation and the auditor (Iskandar et al., 2010; Aksu et al., 2007).). In circumstance where the existence of relationships between the audit firm and the audit client is apparent, the appointed auditor is often not perceived to be independent of