Auditing is an independent, objective assurance & consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. Auditing is globally recognized. It is counter check to accounting data so that any error, mistake or fraud can be easily detected through the technique of auditing. It is the primary source of advice on efficiency, effectiveness and overall economy of an establishment. Auditing starts its journey where accounting end. In today’s society the exercise of an auditor’s to the economic and ethical leadership sets the bounding standard or in other words equips an auditor in such a way that recognizes him as a reliable body. With the growing conscious recognition of the importance of financial data in the ordering of everyday business and economic life, the need of basic economic facts is providing a constantly enlarging opportunity for the accounting profession. The auditors' reports have an especial capacity to fulfill the need for reliable and authoritative financial material not only because of the reputation or prestige of the certified statements, but also because of the significance generally attached by the business man to the functions of the auditor and his reports. These functions, and the scope of these reports, have in the past been definitely related to the character of and changes in business activity. Audits and reviews are basically procedures performed on the financial statements of a company, for the purpose of determining whether the financial statements include any material misstatements. Misstatements are essentially wrong numbers due to numerical errors, fraud, or errors in interpreting the accounting rules. Misstatements are material if they are large enough to make a difference to a user of the financial statements, such as a bank or investor. And the person who involved in auditing is known as auditor. It also provides the techniques necessary to examine the internal control system of a company and perform operational or compliance audits by internal or external auditors. The early conceptions of the functions of the auditor were such as to confine him to the duties of a mere checker and verifier of debits and credits. As business became more complex in its interrelationships there has been a compensating broadening demand for the acceptance of new and formerly unrecognized responsibilities by the auditor.



History of Auditing
Auditing existed primarily as a method to maintain governmental accountancy, and recordkeeping was its mainstay. It wasn't until the advent of the Industrial Revolution, from 1750 to 1850, that auditing began its evolution into a field of fraud detection and financial accountability. Businesses expanded during this period, resulting in increased job positions between owners to customers. Management was hired to operate businesses in the owners' absences, and owners found an increasing need to monitor their financial activities, both for accuracy and for fraud prevention. In the early 20th century, the reporting practice of auditors, which involved submitting reports of their duties and findings, was standardized as the "Independent Auditor's Report." The increase in demand for auditors lead to the development of the testing process. Auditors developed a way to strategically select key cases as representative of the company's overall performance. This was an affordable alternative to examining every case in detail, and it required less time than the standard audit. Many auditors in the likes of Mascarenhas & Turley, 1990; Abdel-Qader, 2002; Porter, et al., 2005 concurred with Flint (1988) that the aim of an audit has always been a dynamic rather than a static one. Brown (1962) asserts that the objective and techniques of auditing have changed during the four hundred years of recognizable existence of auditing to suit the changing needs and expectations of society. It can be observed that the changes in needs and expectations of society are highly influenced by the factors contextual to the economic, political and sociological environment at a particular point of time. Therefore, the review of the historical development of auditing enables one to understand, analyze and interpret the evolution of auditing due to the change in expectations of the society. Auditing as it exists today was established only in the later part of the nineteenth century, born out of the complexity of modern day business world. During the 18 th century, industrial revolution brought in large scale production, steam power, improved facilities and better means of communication. This resulted in the origin of Joint stock form of organizations. Shareholders contribute capital of these companies but do not have control over the day to day working of the organization. The shareholders who have invested their money would naturally be interested in knowing the financial position of the company, to enable them to know this; the shareholders formed a body known as the board of directors who then present as account to them at the end of each financial year. Soon, a problem of believing that their funds have been honestly and prudently managed arose, this originated the need of an independent person who would check the accounts and report back to the shareholders on the accuracy of the accounts and the safety of their investment. At this stage, it is important to have the concept of “audit” defined.


He mentioned and described the duties and responsibilities of an auditor. and whether the profit and Loss account gives a true and fair view of profit or loss for the financial period. together with the books. they appointed certain persons to check the accounts. there have been lot of changes in the scope and definition of audit and the duties and responsibilities of an auditor.Audit Auditing The word “audit” came from the Latin word “audire”. It was an Italian. as the balance of that account must be included in some form or other in the former”. So we can say that auditing is an art and science of systematically scrutinizing the books of accounts and other relevant records of an enterprise in order to find out the exact financial position of the concerned enterprise for the sake of stakeholders.M. In olden times. 3|Page . effectiveness of the company. The Auditor will have to go through various books and accounts and related evidence to satisfy him about the accuracy and authenticity to report the financial health of the business. He further continues that an “audit of a balance sheet involves the verification of the profit and loss account. have defined Audit as “such as examination of the books. and vouchers relating thereto in such a manner that manner that auditor may be able to satisfy himself and honestly report that.” F. It is clear from the above definitions that auditing is the systematic and scientific examination of the books of a accounts and records of a business so as to enable the auditor to satisfy himself that the Balance Sheet and the Profit and Loss Account are properly drawn up so as to exhibit a true and fair view of the financial state of affairs of the business and profit or loss for the financial period. such balance sheet properly drawn up so as to exhibit a true and correct view of the state of affairs to the particular concern according to the information and explanations given to him. accounts. in what respect he is not satisfied. accounts and vouchers of a business. whenever the owners of a business suspected fraud. audit is a social phenomenon which serves no purpose or value except if its practical usefulness and its existence is wholly utilitarian. since then. According to Flint (1988). Spicer and Pegler . so as to give a true and fair view of the state of the affairs of the business. meaning “to hear”. Auditing is the management’s primary source of advice on efficiency. Such persons sent for the accountants and “heard” whatever they had to say connection with the accounts. according to the best of his information and the explanations given to him and as shown by the books and if not. describes auditing as “ the examination of a balance sheet and Profit and Loss account prepared by others. as will enable the auditor to satisfy himself that the balance sheet is properly drawn up. De Paula. an English authority on auditing literature. Luca Paciaio.R. in his opinion. who first published his treatise on double entry system of book-keeping for the first time in 1494. and as shown by the books”.

such as information about environmental performance. Specifically. However. describes the minimum requirements for conduct. Along with evaluating a project or aspect of a company. there are now professions conducting environmental audits. The overall purpose of an audit function is to provide for verification of records. mistake or fraud in the books of accounts and other relevant records of an enterprise. and the veracity of the financial records of the business. processes or functions in a sufficiently independent manner from the institution or subject being audited in order to add its value and improve its operations.Audit Auditor An auditor is a professional who is responsible for evaluating some aspects of a project. Purpose of Auditing As promulgated by Auditors. Traditionally. business. Auditors are also to conduct themselves in a manner consistent with the promotion of cooperation and good relations between auditors and the sector. and behavioral expectations rather than specific activities. audits are mainly associated with gaining information about financial systems and financial records of a company or a business. the efficient use of labor and other resources associated with the business.  To independently identify information that which is essential to develop an overall picture of the institution/local authority. its objectives are –  To detect any error. Auditors often are employed for the task of determining the level of efficiency present in the production process of a business. recent auditing has begun to include other information about the system. As a result. or individuals. The Code of Ethics states principles and expectations governing behavior of individuals and organizations in the conduct of auditing. 4|Page . Auditing should adopt and uphold the Code of Ethics. an auditor is often expected to make recommendations regarding the correction of negative conditions that currently impact the organization.

fairness. public – spiritedness and courtesy in the discharge of duties. 1984). The Charter for the Public Service in Africa refers to ethics as “the standards which guide the behaviors and actions of personnel in public institutions” Article 22 of this Charter further provides ethics to mean a sound culture based on ethical values and principles. it evaluates conduct against some absolute criteria and puts negative or positive values on it (Hanekom. 1998). professional discipline.  To identify strengths and weaknesses of the administrative structures in order to inform decisions on overall strengthening of the institution. Therefore public service ethics are broad norms that delineate how public servants – as agents of the state and . or systems ability to control risk.Audit  To identify any weaknesses or administrative flows which otherwise would not be identified due to unwillingness or inability by insiders of the institutions. right or wrong behavior.  To provide baselines on which reforms can be assessed. equity. Chapman (1993) defines ethics as the basic principles of the right action and rules of conduct. Ethics There is no universally agreed definition of the term “ethics” (Ayee. where applicable. Ethics deals with the character and conduct of morals of human beings. Similarly. as members of an established profession such as accounting. etc should exercise judgment and discretion in carrying out their official duties. Such values and principles according to the Charter include: efficiency. dignity. 5|Page . It deals with good or bad. law. function.  To perform an independent assessment of an action. human resource management. impartiality. or system. function. in order to determine the effectiveness of that action. These criteria can be in writing or merely the interpretation by an individual of what is acceptable and what is not. The question of ethics is one that is linked to the history of mankind.

as well as all other individuals working on a company audit. founded as it is on the trust placed in its objective assurance about risk management. An auditor is the most reliable economic guard against fraud. The fact that a particular conduct is not mentioned in the Rules of Conduct does not prevent it from being unacceptable or discreditable. Hence. breaches of the Code of Ethics will be evaluated and administered according to Disciplinary Procedures. Auditor as an Economic Guard against Fraud The Auditing Standard defined an audit as the independent examination of and an expression of opinion on the financial statement of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligation. The goal of an auditor is to express an opinion on the person or organization or system in question. and governance. an audit seeks to provide only reasonable assurance that the statements are free from material error. external and student auditors. For association members. under evaluation based on work done on a test basis. statistical sampling is often adopted in audits. • The Rules of Conduct describe behavior norms expected of auditors. Below they are set out together with the principle they interpret. and therefore. Due to practical constraints. the member liable to disciplinary action. The Code of Ethics extends beyond the definition of auditing to include two essential components – • Principles that is relevant to the profession and practice of auditing. control. Auditors’ tasks are performed to ascertain the validity and reliability of information. also to provide an assessment of a system’s internal control. Applicability and Enforcement This Code of Ethics is directed to internal. These rules are an aid to interpreting the Principles into practical applications and are intended to guide the ethical conduct of auditors.Audit Importance of the Code of Ethics A code of ethics is necessary and appropriate for the auditing profession. 6|Page .

Audit In the case of financial audits. also other people including being loved by God will trust it. "Why do we have to be honest?" . hypocrite. to say or to give information according to the fact and the truth. so if someone said something that is not according to the truth and the reality or did not admit about anything that according to the fact. the answer would be honesty is a very good behavior. and how is our behavior to become an honest Tao practitioner? • • • Are we not supposed to lie at all? Is it possible that we always honest in our daily life? Or is there any tolerance where we could lie in certain thing for the sake of any interest? 7|Page . Why do we have to be honest? Elderly has told us that we have to be an honest person. it is still need to be considered. etc.a concept influenced by both quantitative and qualitative factors. no matter what! These answers are not satisfying at all. HONESTY Definition In a plain meaning. lying. Professional Ethics of an Auditor 1. or sometime it also said that: we have to be honest. after trying to think it over and to dive into this matter. In practice and its application. When we stick to the plain meaning and literally. by law someone's honesty is being marked by the accuracy of one's confession or what has been told against the actual and the truth of what has happened. In educating and motivating a child to become an honest person. this person can be regarded or appraised dishonest. However. Mostly. honesty is to admit. it is often said that honesty is a very good behavior. a set of financial statements are said to be true and fair when they are free of material misstatements. it is still being asked: why do we have to be an honest person? What would be the positive side of it? How is to have an honest conduct? How that honesty is can be perform in our daily life.

Audit 2. The good work ethic may include completing tasks in a timely manner with the highest quality possible and taking pride in completed tasks. Work ethic is usually concerned with the personal values demonstrated by business owners or entrepreneurs and instilled in the company’s employees. These personal traits often display themselves publicly when individuals respond to various business situations. reinforce and update his/her knowledge. Small businesses that treat each customer in a professional manner and display a strong work ethic 8|Page . Function Small businesses often use professionalism to help them establish a good reputation in the business environment. honesty and integrity. Definition Professionalism is often defined as the strict adherence to courtesy. This is in accordance with Article 21 of the Charter for the Public Service in Africa which states that – “Professionalism manifests itself in the public service employee’s behaviour at work and in his/her constant effort to improve. refine the skills that are necessary for carrying out his/her tasks and enhancing his/her output and productivity”. Morality and ethics usually represent the personal beliefs individuals display when working in business. an important advertising strategy is word-of-mouth. This trait often includes a high level of excellence going above and beyond basic requirements. Common traits often include transparency. The style and organizational structure may also depend on the entrepreneur’s personal use of professionalism and his work ethic when handling business situations. While businesses may be started under a variety of circumstances. Because many small businesses have limited capital resources during the early years of operations. they often contain similar business elements. A professional work ethic may be seen as somebody “walking the walk” regarding their personal morality and ethics. Business owners often use these elements to ensure that their company operates in the highest professional and ethical manner possible. PROFESSIONALISM Professionalism and work ethic are two important features in the small-business environment. honesty and responsibility when dealing with individuals or other companies in the business environment. Features Professionalism and the work ethic demonstrated by individuals in the business environment may be built around an internal moral system or code of ethics.

These guidelines may also be included in the company's employee manual so business owners can properly train and educate individuals about the importance of the company’s professionalism and work ethic. Considerations Transforming an individual's understanding of professionalism and work ethic may be a difficult process in small business. expectations and outcome. when business integrity is present throughout the deepest layers of a company and not just at its surface. principles. — Alan K. especially if they are well compensated. Integrity requires Auditors to observe both the form and spirit of auditing standards. The concept of integrity has to do with perceived consistency of actions. objectivity. I have discovered that at the very top of the list is the distinguishing quality of integrity. It also requires observing the principles of independence. INTEGRITY Integrity is one of the most important and oft-cited of virtue terms. and absolute honesty in their work. “integrity” refers to a quality of a person’s character. When used as a virtue term. nothing else matters. it becomes the heart and soul of the company’s 9|Page . Simpson If I were to ask you what attribute is the most influential in regard to the success of a business. If you have integrity.Audit when completing business functions or responsibilities can help develop positive goodwill with consumers. The integrity of Auditors establishes trust and provides the basis for reliance on their judgment. These written guidelines can help the business owner translate his company's mission or vision to employees. Many individuals may not have the same views on professionalism and work ethic as the business owner. Effects Business owners and entrepreneurs may decide to create a written set of guidelines outlining their company’s professionalism and work ethic expectations. a business is usually short-lived. If you don’t have integrity. Business owners may hire these individuals if they have technical experience or expertise in the business. nothing else matters. measures. would you know immediately which one is the most important? Based on my many years as a business owner and entrepreneur. Without integrity at the helm of a company. 3. In fact. values. regardless of the employee’s personal moral or ethical beliefs. standards of professional conduct. methods. But employees often adopt the business’s professionalism and work ethic guidelines when working for a company.

Furthermore. integrity and ethical conduct. its company and the team members. reliability and credibility extremely important. But integrity is not something that can be grasped and then simply used. but in recent times has been shown as falling short. others sense it and find it very attractive. that it remains steadfast no matter what. Since there is a wealth of competitive companies easily available and accessible via the Internet. the consequence of global competition means that customers will simply not consider a company that shows any less than the highest level of integrity. diligence. Just as it sounds.Audit culture and can mean the difference between a company that succeeds and a company that falters. The Internet’s Immeasurable Impact on the Marketplace! The importance of integrity has always existed among the business community. Integrity in its essence must be so ingrained within the nature of an individual. Relationship Marketing is founded on the single and most critical characteristic. 10 | P a g e . and responsibility. Based on many years of study. achieving true integrity with clients often leaves many an entrepreneur bewildered. grasping for techniques and strategies that guarantee their futures. Where Does Integrity Start? In an effort to build upon a foundation of integrity. or engage in acts that are discreditable to the profession of auditing or to the organization. recognizing their different experiences and areas of expertise. and contribute to the legitimate and ethical objectives of the organization. • Not represent themselves as employees or contractors for the Construction Safety Network at any time. It is the Internet’s immeasurable impact on the global marketplace that is now making the expression of integrity. there is in fact no need to accept anything less than the best. the first requirement would be to establish excellent rapport with clients. • Not knowingly be a party to any illegal activity. Without question. • Respect the integrity of other auditors. • Achieve their work with honesty. known as “Integrity. • Observe the law and make disclosures expected by the law. the best and most practiced method for achieving rapport is by way of Relationship Marketing.” However. Auditors shall – • Follow high standards of fairness.

stated: “Not only is ethical behavior in the business world the right and principled thing to do. integrity begins with a company leader who understands the qualities of integrity which then filters down throughout the company into every department and every member’s approach and attitude. • Reveal any potential personal or perceived conflict of interest during initial contact or communication with a client. it was found that companies displaying a “clear commitment to ethical conduct” almost invariably outperform companies that do not display ethical conduct. not only in fact but also in appearance. and communicating information about the activity or process being examined. Auditors shall – • Sustain the confidentiality of information received during the audit. • Take all reasonable steps to protect the confidentiality of the audit results. 4. • Auditors must avoid conflicts of interest at all times. In recent research performed by the Institute of Business Ethics.Audit The True Nature of Integrity! Now you are probably asking yourself. data collected and the anonymity of interviewees. what is the true nature of integrity? There are in fact some very basic principles that surround the qualities of business integrity. They must make a balanced assessment of all the relevant circumstances and not to be unduly influenced by their own interests or by others in forming judgments.” These findings deserve to be considered as an important tool for companies striving for long-term prospects and growth. • Be prudent in the use and protection of information acquired in the course of their duties. The Director of the Institute of Business Ethics. but it has been proven that ethical behavior pays off in financial organization which is among the world’s leaders in promoting corporate ethical best practices. 11 | P a g e . At its core. evaluating. • Not use audit information for any personal gain or in any manner that would be contrary to the law or detrimental to the legitimate and ethical objectives of the organization. OBJECTIVITY Auditors must exhibit the highest level of professional objectivity in gathering. It is essential that auditors are independent and impartial. Philippa Foster Black.

and experience. 5. • Strive to be complete in their evaluations and avoid any omissions. • Commit to honest. thorough and straightforward communication in the performance of audit activities. compromise or threaten the ability of the auditor to act and be seen to be acting independently. • Serve the client in a conscientious. Auditors shall • Engage only in those services for which they have the necessary knowledge. • Uphold both the actual and perceived political neutrality in order to discharge their duties and responsibilities in an impartial way. • Be consistent and accurate in their evaluations of data obtained through documentation. COMPETENCY Auditors must apply the knowledge. Auditor Violation and Disciplinary Process 12 | P a g e . measurable data. and experience needed in the performance of auditing services. interviews and observation. such as recommendations or explanations of results. and not assign or subcontract any obligation of the audit program. • Assist clients with any post audit questions. Support for auditor opinions must be derived from quantitative. diligent. • Separate fact from opinion clearly and concisely in their evaluations. • Willingly and openly share their collective knowledge and always be in the pursuit of the truth and enhancement of health and safety in the construction sector. • Continually improve their proficiency and the effectiveness and quality of their skills. respectful and efficient manner. skills.Audit • Auditors must not conduct two consecutive audits for a company. • Protect their independence and not accept any gifts of gratuities which could influence. skills.

Permanent removal of the auditor’s certification. and will result in swift intervention by the Company. Formal letter advising the auditor of the violation. auditors will cooperate fully with an inquiry in the event of a breach of this Code of Ethics. the following sanctions may be administered to the auditor for violations of the Code depending on the situation 1. The undermining practices and behaviors are many but this paper emphasizes the following 1. conflict of interest. and a stipulation to not have this reoccur. and illegal deals impose heavy costs on the economy while distorting development policies and undermining confidence in public institutions. As part of the Code of Ethics. Broadly defined. In particular. 3. the Code of Ethics is the accepted practices that surround the auditor. 4. Corruption 2. However. Suspension of the auditor’s certification. The Company is not required to apply progressive discipline in situations which are serious in nature and warrant severe penalties up to and including permanent removal of certification.Audit During the audit process. All sanctions against an auditor will involve a full investigation before any actions are taken. Bribery. corruption is the abuse of entrusted power for personal gain. a restatement of the required standard. three specific conditions must apply for an act to be considered corrupt – 13 | P a g e . A requirement to have retraining undertaken by the auditor. Human resources management & malpractice Corruption Corruption threatens the economic and political fortunes of developing countries the most. Violations of these are considered to be serious in nature. Conflict of interest and 3. 2.

The arm’s – length principle is violated. Exacerbated poverty – Corruption lowers the income potential of the poor because there are fewer 14 | P a g e . Resource Misallocation – Resources that could be put to productive uses are instead devoted to corruption. ii. Consumers end up paying in terms of higher prices. making an investment there a risky proposition. i. lower quality. iv. while new firms face high barriers to entry. Rampant corruption signals to potential investors that the rule of law. Both business and society bear the costs of corruption through. Reduction in competition.g. Public confidence can only be reclaimed by establishing a reputation of integrity. Bureaucrats are not held accountable for their performance and actually have incentives to delay services in order to extract bribes. it could involve favoritism or non – monetary gifts. There must be some advantage for both parties to commit this violation. in investment) that do not serve the public interest. The bias or conflict of interest must be intentional. Lower investment – Foreign and domestic investors are scared off by unpredictable costs. v. and limited product offerings. This advantage need not be monetary in nature. Officials make biased decisions (e. and thus property rights. iii. b. are very weak in the country. Unresponsive policies and poor administration – Law makers in corrupt systems use their powers to help rent – seekers. Corruption is one of the most serious unethical practices that undermine trust and confidence of public officials. and taxpayers swallow the cost. not citizenry as a whole. efficiency and innovation – Rent – seeking means that favored companies do not compete on market signals alone. Firms waste time and resources on rent – seeking – cultivating relationships with officials and spending on bribes. The two parties in a transaction display bias for working with each other that is inconsistent with impartial treatment. Lower investment means lower growth. c.Audit a.

It also limits their access to quality public services such as health care and education. Lack of transparency and accountability – When deals are made behind closed doors. and high cost of compliance will render laws ineffective. 15 | P a g e . However. simply raising the wages of officials will not curb corruption so long as opportunities to abuse the system persist. the discretionary power of officials is amplified. 2008). it becomes impossible to assess the criteria behind decisions. Causes of corruption Corruption has multiple roots. and unfair enforcement of laws and regulations – Even if laws to combat corruption are on the books. A weak justice system. lax enforcement can invite abuse.Audit private sector opportunities. but generally can be attributed to the poor design of institutions (Cipe. they escape being accountable. iv. and frequently changing laws and regulations – When laws are contradictory or require heavy interpretation. Unclear. entrepreneurs do not know their rights and obligations. ii. Corruption then becomes a means to circumvent inefficiency and arbitrary official actions. increasing the risk that they will make arbitrary. When laws are unpredictable. If violators on both the public and private sides conceal their transactions. self – serving decisions. complex. they resort to corruption to supplement their income. inconsistent. Inadequate. Low public service salaries – when officials cannot meet what they perceive as their daily needs through their salaries. low penalties. Some of the deepest roots include the following – i. whether they serve public interest and respect the law. iii. so they can not comply fully nor defend themselves for example against illegal inspections.

16 | P a g e . managing the conduct of public servants means being able to monitor their behavior and being able to detect any systematic failures that allow high degrees of misconduct in order to take prompt remedial action. and comprehensive disclosure procedures. An auditor is not bound to be a detective. Essentially. He is justified in believing tried servants of the company in whom confidence is placed by the company. cautious auditor would use. care and caution which a reasonably careful. Similarly. or. What is reasonable skill. not a bloodhound. He is a watchdog. as was said to approach his work with suspicion. sound human resource management practices. Present Day Audit Situation It is the duty of an auditor to bring to bear on the work he has to perform that skill. it entails having in place – among other systems – an overall national integrity strategy. The U N D E S A (2001) survey observed that although some African countries espouse a national integrity strategy or broad ethics or uncorrupting policies. not only to punish violations but also to serve as a deterrent for other contemplating similar actions. or with a forgone conclusion that there is something wrong. measures for guiding and managing the behaviors of government employees require enforcement procedures to be effective. The government as the employer must have a way of enforcing minimal standards. care and caution must depend on the particular circumstances of each case.Audit Integrity Strategy and Procedures In order to manage the conduct of public servants. provided he takes reasonable care. few seem to have coordinating strategies in place. He is entitled to assume that they are honest and rely upon their representations.

consulting revenues exceeded auditing revenues at all the major audit firms in the USA. Adelphia. 2006). nearly all large accounting firms split their consulting arms into separate companies and made announcements on their more stringent rules and measures to ensure better independence and audit quality. Since the early 1990s. Furthermore. The Sarbanes-Oxley Act (The US) in response to the fall of Enron the Sarbanes-Oxley Act was implemented. by the accounting bodies.. Regulators of the auditing profession and the investing public began to doubt whether audit firms could remain independent on audit issues when the firms were so dependent on consulting revenues. stock exchange commissions and academics to strengthen the audit practice (Leung. the audit profession began to take increased responsibility to detect and report fraud and to assess. the act also requires auditors to report to the audit committee on those significant matters. Some of the key reform activities include – 1. By 2000. the ultimate objective of auditing is to lend credibility to financial and non-financial information provided by management in annual reports. et al. As a consequence of the high level of litigation and criticism against the auditors. the control of audit quality. The business risk approach rests on the notion that a broad range of the client’s business risks are relevant to the audit. a spate of radical reforms was undertaken in various countries. present-day auditing has developed into new processes that build on a business risk perspective of their clients. This is in view of the fact that a number of 17 | P a g e . Enron and WorldCom. The SarbanesOxley extended the duties of auditor to audit the adequacy of internal controls over financial reporting. and the rotation of audit partners as well as the prohibition of conflict-of-interest situation. Furthermore by understanding the full range of risks in businesses. Adoption of the business risk approach in turn enhances auditor’s ability to fulfill these responsibilities. will eventually affect the financial statement. The collapses of these giant corporations had brought about a crisis of confidence in the work of auditors (Boynton & Johnson. for example. doubts about an auditor’s ability to continue in conformance with society’s and regulators’ increasing concern about corporate governance matters. 2004). if not controlled. Waste Management. According to Porter et al (2005).Audit The auditing profession witnessed substantial and rapid change since 1990s as a result of the accelerating growth at the world economies. however. The quality of audits is being placed under scrutiny after a series of financial scandals of public companies such as Sunbeam. The Public Company Accounting Oversight Board which oversees audit firms and their procedures and the enforcement of accounting standards is also established as a result of this act. audit firms have been largely providing consultancy services to businesses. It outlines the rules on auditor independence. In addition. Presently. Advocates of the business risk approach opined that many business risks. Xeror. It can be observed that auditing in the present day has expanded beyond the basic financial statement attest function. the auditor will be in a better position to identify matters of significance and relevance to the audit profession on a timely basis. and report more explicitly. governments.

Ramsay report (Australia) As a result of the collapse of HIH Insurance Ltd. It was recommended that auditor independence can be improved through the following ways: Include a statement in the Corporations Act that auditors are to be independent. Conclusion In this report we state our perception regarding honesty. Require auditors to declare to the Board of Directors that their independence is maintained. i. while negative findings can serve to catalyze change. Establish an audit committee to oversee the issue of non-audit services. scope disagreements and auditor-client relationships. We await with interest the Court's interpretation of the words "material conditions or transactions". Although the overall audit objectives in the present period remained the same. So an auditor is the most reliable economic guard to check the day today financial 18 | P a g e . An auditor is therefore mandated to approach his duties with suspicion and to take an investigative approach to each transaction. This exercise aims at building transparency and enhancing accountability of key officials and decision makers within the organization being audited. audit fees. the Australian Government Commission engaged professor Ian Ramsay to investigate the issue of auditor independence.Audit commissions recognized the importance of internal control in preventing financial statement misstatement. integrity and dedicated professionalism which plays an important role of an auditor. lending credibility to the financial statement. Establish an auditor independence supervisory board. 2. To know the details of an auditor behavior we collect information with the help of the internet. Positive findings of an independent audit can go a long way in building public trust in the organization. Prohibit special relationships between the auditor and client.e. critical changes have been made to the audit practice as a result of the extensive reform in various countries.

cannot succeed if the community has come to accept it as a way of life. Not only the internal and external auditors. Some recent study shows that auditor sometimes pursue some illegal activities which may result the dissatisfaction to the external users of audit report like investors as well as country faces economic destruction only because of those fraud activities. Some recent study shows that auditor sometimes pursue some illegal activities which may result the dissatisfaction to the external users of audit report like investors as well as country faces economic destruction only because of those fraud activities. transparency. All these activities are must be needed to present in auditors activity which is the crying need of the business world today. an evil that threatens and weakens public officials’ ethics and integrity. integrity and dedicated professionalism play a crucial role preparing audit report on the true financial position of the entity. Form the sequence of our analysis it seems that Auditor play a vital role for each and every organization. all are tainted by the same brush of guilt or indolence. But in present situation it has been seen that there are several auditors who are trying to unethical practice which are only give benefit to them but it brings negative effect in the economy. Here it can be said that honesty. Therefore public awareness needs to be aroused about the evils of corruption and its implications to the economic and social structures of society.Audit transaction of an entity. integrity and unprofessional behavior in government. But it is true that everything has some positive and negative attributes. the public does not distinguish among those in government. whether they are elected political leaders or career public servants. but also all the employees of the entity must have honesty. 19 | P a g e . In public perception. This has to change if the citizens and the general public have to regain confidence in the public service institution. People are debating and complaining about outright corruption. lack of ethics. It is also important to realize that the war against corruption. integrity and dedicated professionalism. In these discussions.

auditor violation and disciplinary process . purpose of auditing.Audit Executive Summary An auditor is the most reliable economic guard to check the day today financial transaction of an entity. importance of ethics. present day audit situation. In this paper we tried to identify the definition of honesty . integrity and dedicated professionalism and their relationship with business. In today’s society the exercise of an auditor’s to the economic and ethical leadership sets the bounding standard or in other words equips an auditor in such a way that recognizes him as a reliable body. how they can improve their present condition and so many other factors related to 20 | P a g e .

Here we tried to describe the scenario that honesty.” 21 | P a g e . Auditors are also to conduct themselves in a manner consistent with the promotion of cooperation and good relations between auditors and the sector. This Report will give you a lot of information about the “Honesty. the efficient use of labor and other resources associated with the business. and the veracity of the financial records of the business. integrity and dedicated professionalism can elevate the position of an auditor to be the best economic guard of an establishment. Auditors often are employed for the task of determining the level of efficiency present in the production process of a business. Integrity and dedicated professionalism can elevate the position of an auditor to be the best economic guard of an establishment.Audit this matter.

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