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SUMMARY

This thesis aims to reveal arguments about the recent audit practices following financial crisis which began from 2008. It is well known that a large number of financial companies, such as Lehman Brothers and non-financial firms such as Enron had bankrupted, soon after receiving a full audit opinion. In addition, auditors charged large sums of money as audit and non-audit services fees. These events led to investigations on the credibility of external auditors, auditor‟s independence, relevance and quality of audit work and the use of economic incentives for good audit works. The thesis begins by discussing why audits are seen as culprits of seeking self interest, especially since the market is dominated by the 'Big Four' audit firms, PwC, KPMG, Deloitte, Ernst and Young. Secondly, the thesis discovers through examining the criticism related to the independence of audits. The challenges facing auditors in the present business environment is also discussed before giving recommendations on how auditors' importance can be developed. It is inferred that auditors did what they should do, and out of all these, the financial crisis is still happening. Audit should present subjective and critical business insights into the audited entities. The common goal of improving auditors' contribution to prudential regulation and the importance of auditors to the market will be achieved through collaboration with key stakeholders in the market.

CHAPTER 1
INTRODUCTION
In recent years, there is increasing intellectual recognition that modern states have intensified their surveillance and regulation in most aspects of social being. In our everyday life, we are exposed to so many processes of control and new laws that one can almost forget what it is legal and what is illegal. For instance, having a driving license, there is almost every month a new regulation such as equipments of first-aid kit, a classification of speed measurement etc. Of course, these regulations are formed in order to reduce the number of traffic accidents that are incurred, beside carelessness of drives, by new technologies of automobile industry. However, we need to be aware of quantity of all new regulations that directly or indirectly influence our lives. That is probably why so many social researches have focused on examination of mutual connection of technical progress and its potential risk to mechanisms of governance. Concepts such as risk management and audit have become very fashionable and regulatory authority has converted into an object of interest in many different domains of society. The new information structures, which have been developed in industrial capitalism, have resulted that the methods of control had to be altered. Nowadays, business companies are requested more to make their process of production and their financial management public, which is linked to a license acquisition and authorization arrangement that surely has substantial effect on profitability of the organization. The auditing profession has been severally criticized after large companies like Enron, CIT Group, General Motors have suffered bankruptcy. The scrutiny has certainly caused a stir in the world of business, as a result, the pressure has been increasing in the audit profession to evolve and transform what would be of benefit to business society. In this thesis we discuss these criticisms of the audit profession and response to these allegations. The business ethics and compliance are inevitable aspects for maintaining standard of corporate governance. Financial frauds in corporate undermine market confidence, making shareholders less confident. In this case, the role of external auditors is very significant. In a paper written by ACCA; “auditor‟s primary responsibility is to form an opinion whether the financial statements give a true and fair view of enterprise”1.

which means strict measures to be taken by the APB to enhance auditor independence. The main reason for this review is that the UK market is dominated by "big four" firms audit. This raises legitimate concern with respect to innovation and development of the theory and practice of auditing. impairing the independence and objectivity of the auditor. and commitments by the government through tax policies. some economists have tried to pinpoint the role of auditors. discussing areas such as the importance of auditors and their independence. Independence and objectivity are important principles for workplace audit. companies have been providing services other than audit. The thesis is structured in a way that. The collapse of the housing market also had a significant role that lead to the failure of key businesses. the financial crisis would have even worse scenario. PwC. i. A lack of liquidity in the banking system of the United States is a significant cause. decline in consumer wealth.The recent financial crisis which began from 2007 is known to be the worst financial crisis since the Great Depression of the 1930s. More specifically.e. transparency and the expectations gap. Many companies and banks collapsed or nearly are collapsing because of weak financial audits. However. if no auditors had been there. especially for investor‟s confidence. During the last decades. using the relevant literature. and comparing it with the role of auditors in financial collapses of major corporations that have had great impact worldwide and the most recent financial crisis of 2008 after Lehman Brothers and other current cases and trends of auditors. Deloitte. KPMG. In fact. one can say that financial auditors should be more involved in the prevention process. This is done by observing the debate over audit fees paid to audit firms and the diversification of accounting firms in providing non-audit services to their clients.2 Some economists say that the lack of transparency in the financial statements of companies gave birth to the financial crisis. Ernst and Young. Many economists have criticized the role of accountants in the financial crisis. it will discuss the role of auditors. non-audit services with rates generally higher than audit fees. . in general. This paper aims to explain the role of auditors in the economy and how they play an important role to mitigate the financial crisis.

For this reason. Management is responsible for the preparation and presentation of company‟s financial statements in accordance with International Accounting Standards and provide guidance on the prevention and detection of fraud and error in the organization and ensure that the internal control system is established and is functioning properly . businesses and government budgets. this is by having reasonable assurance that the materiality of misstatements in financial statements was observed or not. the auditors during this procedure should carefully consider the risk of material misstatement in the financial statements due to fraud or error.BACKGROUND When auditors begin planning their work.e. Financial statements are prepared and presented to reflect its heritage companies. The auditor should comply with auditing standards i. auditors have to deal with daunting tasks especially those related to risk estimates which are more uncertain and unstable resulting in auditor's responsibility significantly being increased and their credibility being called into question. their aim and goal is to gather and evaluate audit evidence to form an opinion on the company‟s financial statements. The auditor has two alternatives: either to give a qualified or unqualified opinion. or withdraw from auditing the company. International Standards on Auditing and to identify distortions in the financial statements. .4 The world economy was largely affected by the economic downturn and financial crisis affecting financial institutions..3 Auditors must plan their audits in such a way so as to gain reasonable level of certainty about the existence or non-existence of material misstatements in the company‟s financial statements due to fraud and error.

Review of the accuracy and reliability of the accounting records. Review of the accuracy and reliability of the financial reports. SPECIFIC PURPOSE      Operations of the banks being improved.PURPOSE OF STUDY The purpose of the study is to assess auditor‟s role in financial crisis by examining into failed organizations or organizations that were bailed out by government intervention as well as to judge auditors‟ fulfillment of their responsibilities. GENERAL PURPOSE      Review adequacy of risk management procedures and their effectiveness Review adequacy of risk assessment methodologies. Special Investigation Testing the internal controls procedures. Company Assets being safeguarded Timelines of reporting . and their effectiveness Internal Control System‟s adequacy and effectiveness examination and evaluation.

The data for research is obtained from online research articles. JUSTIFY: Auditors use different audit techniques and procedures to reduce the organizations losses and mitigating the effects of the financial crisis. Financial crisis started with mortgages but affected all financial sectors in a similar way. the real problem was the amplification process that decimated everything.SCOPE The scope of this thesis is to examine how internal audit is an independent appraisal function established by the management for the review of the internal control system as a service to the organization. Internal audit function should provide range of coverage of the organization's operations and the internal auditor allowed access to such records and company assets for the proper performance of its responsibilities. SIGNIFICANCE The thesis is qualitative research. . It does not relate to any specific Organization and Company‟s research. Assessment of objectively and adequacy of internal control contribute to the economic and effective use of resources. JUSTIFICATION STATEMENT: Auditing is important for mitigating the effects of the financial crisis. suggesting that while mortgage crisis may have begun financial crisis. Mortgage debt only has abnormally large loss rates in current period.

FINANCIAL CRISIS A financial crisis is often associated with panic or run on the banks. in which investors sell assets or withdraw money from savings accounts fearing the value of these assets will fall if they are at a financial institution. ASSUMPTIONS HYPOTHESES OF THE STUDY: Following are the hypothesis of the study.  Hypothesis : 1 H1: Negative relationship exists between Audit appraisal function and Financial Crisis. All organizations have a management structure which defines relationships between functions and positions. AUDITOR Auditor is a person whose job is to carefully check the accuracy of business records. He may be an independent auditor unaffiliated with the substitution audited or elected public official. . Organizations are open systems as they affect and are affected by the environment beyond their borders. and authority to carry out certain tasks. and subdivides and delegates roles.DEFINITION OF KEY TERMS AUDIT Objective examination and evaluation of company‟s financial statement.  Hypothesis : 2 H2: Relationship between External Auditor and Organization could either be positive or negative. ORGANIZATION A social unit of people systematically structured and managed to meet the need or to pursue collective goals. responsibilities.

CHAPTER 2 LITERATURE REVIEW Auditors are plan their work to gather and assess audit evidence so as to form an opinion on the financial statements.3 Auditors plan their audits so as to obtain a suitable level of certainty on the existence or nonexistence of material misstatement in the financial statements as a result of fraud and error.6 . Financial Statements are disclosed by the publicly listed companies for use of investors and other external stakeholders. reliability and transparency before being published. Management is responsible for the preparation and presentation of financial statements in accordance with International Accounting Standards to prevent and detect fraud and/or error in the organization as well as ensuring that the proper function of internal control system. Financial statements are prepared and presented by management to give true and fair view of the organization.5 Financial crisis of 2008 revealed many issues and negligence of organizations and the regulatory bodies. These financial statements are verified by auditors for their accuracy. The auditor must comply with International Standards on Auditing and should detect any errors in the financial statements. this is by obtaining reasonable assurance that the materiality of misstatements was observed or not. The collapse of Lehman Brothers caused massive shock to the US economy. verify whether organization followed proper legal regulations for disclosing financial report and encourage or assist managers and other internal stakeholders in developing or improving one or more of an organization‟s performance management systems. Auditors must verify that proper accounting records are maintained. Auditors‟ silence and negligence was criticized as one of the major reason behind financial crisis of 2008. or to leave from carrying on the audit process. tally historical accounting record with financial statements.4 Verifying financial and accounting information given by an organization is important part of audit process. “Unlike typical repo transactions. „Repo 105‟ used by US Bank misled the entire market. during this exercise auditors should carefully consider the risk of material misstatement in financial statements of the company resulting from fraud or error. Lehman made Repo 105 transactions as sales for accounting purposes”. The auditor has two alternatives: either to give a qualified or non-qualified opinion.

Thus. against ISA 570. On January 28th 2008.9 International Standards on Auditing states. The main reason for this criticism is that the UK market is dominated by the „Big 4‟ audit firms. Ernst & Young were the auditors of Lehman‟s accounting information and they helped the bank to hide $50bn debt for the market.8 The audit profession is criticized of seeking self interest. p. yet on the other hand those banks were on the verge of collapse is open to conjecture. hence misleading the public and investors and thus causing the crisis. in the dawn of August 2008 the company . “auditor‟s procedures necessarily involve a consideration of the entity‟s ability to continue in operational existence for the foreseeable future. In case of Lehman Brother.The banks during the financial crisis failed to identify or to take necessary steps in reducing the liquidity risks and hid their poor conditions by disclosing false financial statements.7 This silence of the auditing firms encouraged the companies to take unnecessary risks through various complex financial instruments such as Repo 105. Ernst and Young. KPMG. 2004a. Deloitte. Going concern concept requires that financial statements of the company to be prepared on the basis that the company will continue to be in operational existence for the foreseeable future. They knew that the government would bail these firms out with tax payers‟ money. In turn that necessitates consideration of both the current and the possible future circumstances of the business and the environment in which it operates” (Auditing Practices Board. The Auditing Practice Board (APB) is board that sets standards on the applicability of the IAS in the UK but has a number of its members that are at present or formerly associated with one of the Big 4. It is also argued that APB does not consider small auditing firms when dealing with IAS as well as in other important audit issues. Lehman Brothers received an unqualified audit opinion on its financial statements. the manner in which auditors constructed audits in their interest that some of the major banks were a going concern. together with a green light on the health of its quarterly accounts on July 10th. 2008.8). Argument for self interest in the auditing profession is when directors are accused of misusing the going concern concept. This is the main reason the critics believe that auditors act in their own interests with standards and issues regulatory issues. this auditing firm was charged against professional negligence by regulatory bodies of US. PwC. However. Nonetheless. by signing off audit reports of deteriorating firms. External auditors play a very important role as “The external auditors‟ main responsibility is to form an opinion on whether the company‟s financial statements show a true and fair view”.

auditors and audit committees. one of the largest investment banks in United States. where the large picture that shareholders want to see is lost in a sea of detail and regulatory disclosures”. by the 10th of March the company was all over the news channel for its financial problems and it was sold to JP Morgan.10 The 2008 regulations were crafted to work in parallel with the Auditing Practices Board‟s (APB‟s) Ethical Standards to ensure that auditors maintain their independence. the communication between board members. Bear Stearns. On January 28th 2008. However. The Ethical Standards required auditors to carefully analyze threats to their independence (this includes the provision of non-audit services) and to take measures necessary for safeguarding their independence. In the report. Issues such as the relationship between the auditor and their clients.was struck in severe financial problems and was forced to file for bankruptcy on September 14th. The House of Commons Treasury Select Committee in its report “The Banking Crisis: Reforming Corporate Governance and Pay in the City added recommendations to the review raising concerns about the fees paid to auditors by clients that they audit for non-audit services provided at the eve of the financial crisis. On 17 December 2010. As research of the collapse of Enron Corporation. The UK Government also altered 2008 regulations so as to compel companies to disclosure of fees for non-audit services to associated parties. received an unqualified audit opinion. auditors failed to include a . the review by APB was completed. APB‟s Ethical Standards had provision for disclosure of important services of non-audit services to the audit committee. 2008. the auditor is required to refuse to offer some non-audit services or even to turn down the audit appointment. This means that in some cases. The House of Commons Treasury is “… perturbed that the process results in “tunnel vision”.12 Transparency is also major issue in the auditing profession. and whether the auditors exercise their proper rights to be independent and objective by carrying out adequate research and tests on the financial statements are not fully communicated. in order to comply with the Ethical Standards.11 A report by the House of Commons Treasury‟s titled “Banking Crisis: Reforming Corporate Governance and Pay in the City” questions the role of auditort. which led to the proposition by the Government to revise the classification in auditing regulations. Although financial statements are published on a regular basis it is not the whole story.

he posits that auditors acted in the way they were supposed but they should accept changes. This claim however cannot be proven when looking at what the current financial crisis has taught us.13 Auditing standards also require auditors to “perform audit procedures designed to obtain sufficient appropriate audit evidence that all events up to the date of the auditor‟s report may require adjustment or disclosure in. From the crisis.16 The financial crisis has led to some old and new questions regarding auditing practices.14 In response to the auditors‟ independence and objectivity. The bases of this claim is on the notion that auditors are privy to „inside‟ information and is therefore able to restrain management‟s enthusiasm and report superior information. In 2006. and the mere provision of a going concern opinion does not in itself guarantee assurance. the financial statements have been identified“. Investors expect auditors to audit their firms independently and objectively with the purpose of best serving their interests. The financial crisis has taken this agenda to new heights and the role of auditors has become even more questionable. finance leaders and committees have suggested that the auditing profession needs to not only to evolve but must transform. carried an unqualified audit .15 This discussion leads us to the controversial topic of the „expectations gap‟. For that case. This view is also shared by Professor Michael Power of the London School of Economics and Jonathan Hayward of Independent Audit. auditors‟ job is not to predict the future. audit reports of companies failing shortly before the financial crisis did not reflect the „threat to insolvency‟ hence misleading investors and misusing the going concern guidance. on the other hand. Conservatives have argued that external audit adds value and credibility to financial statements. Auditors. it is clear that market and other stakeholders were not reasonably reassured by unqualified audit reports issued by major auditing firms.going-concern paragraph in their report on the Enron‟s financial statements. the financial statements of Northern Rock. one of the largest mortgage providers in the UK. Priddy is in favor of change but thinks there are challenges facing the changes. argue that their role is not to detect fraud but to give a „true and fair view‟ of the organization. failure to issue a going-concern opinion is insufficient evidence of failure of audits. However. Auditors are expected to comply with the laws and standards when conducting an audit. According to Lord Lawson. The case would have been different in deed. changes that are important for the profession.

18 It is preferably simple to imagine that an individual audit of entities‟ financial statements would have identified the looming global financial crisis and its impacts. Auditors are expected to do more. On the contrary. then they should know that they would be different. It cannot be more clearer that markets have become increasingly complex and that stakeholders‟ demands have not only increased but have become more refined. In fact. If this was so then we would have to be where we are at present. while the market is increasingly changing. and they can do more.opinion and in July 2007. Nevertheless. Failure to estimate the assumed risks at board level and static business models among other factors slowly mounted the depression. most of the big downfalls were as a result of bad managerial decisions and not about fraud or even misappropriation of assets. the bank‟s interim accounts received a positive feedback from its reporting accountants. Generally. little is known about the credibility that is added to financial statements and particularly because audit evidence is not made “public”. This is a time whereby the need for genuine assurance has never been greater. the substance of a statutory audit opinion has remained unharmed for over a century. the existence of an audit is precisely to remain independent and objective. auditors will have assumed the role of management and back to fundamentals. nevertheless these hopes have to be realistic. If an Audit didn‟t exist in the first place. the bank was on a run during August and September 2007. then it would have to be created anyway. the audit profession has been using 20th century strategy against 21st century market demands and risks. But confidence in auditing has been eroded and this has made users of accounting information to pay no attention to audit assurances. The main question is who would audit the auditors‟ assumptions and critical judgments? In this case. But accounts prepared by the auditor would neither be independently audited.19 . The financial disaster came as a result of complex and multiple factors over a long period of time. Nevertheless.17 When an investor inquires about how the company accounts look like if they were prepared by Auditors.

the auditing firm of Lehman Brother was informed of this reality. the government body answerable for reviewing auditors. As a matter of fact. including the audit regulatory body. If auditors cooperate with other market participants including those in charge of corporate governance. they have not been able to adjust to the ever changing market environment. and i. instead they are being criticized for not doing something different. concluded that audit quality in the United Kingdom was “fundamentally sound”  The Treasury Select Committee and FSA have also recognized the value of auditors work amidst the constraints they operate in. Some of these studies include:  A study by the University of Maastricht in 2009 (after the financial crisis) indicated that “auditors‟ work is valuable as it increases the confidence in and faith on financial statements.Time has come for auditors to acknowledge this gap.21 The banks during the financial crisis failed to identify and to take required steps in mitigating the liquidity risks. The Ernst & Young were the auditors of Lehman‟s accounting information and they . All these make the reporting framework responsible for corporate governance. audit and risk committees. and internal audit. Moreover.20 A study by ICAEW has indicated that 84 percent of the FTSE 100 boards consist of an Institute member and most of the other members‟ minister in key roles in the financial sector.e. auditors are well placed in a unique and privileged position to positively contribute to the financial stability of markets and it would be silly not to seize this timely opportunity. the expectations gap can be tightened as a result of an expanded scope of their work. The fact is auditors have not been criticized in essence. Auditors have got the ability to close this gap. In this case. many banks conceal their poor conditions by disclosing untrue financial statements. Most of the surveys conducted in the market generally support the need for audits and have conveyed confidence in audits. But the expectations gap is mistakably supposed to refer only to the role of auditors yet more broadly it includes the role of non-executive directors.”  In a recent review by the Audit Inspection Unit. they have to admit that this gap is not going away and even of more importance enfold it as an opportunity to make radically constructive changes.

23 . However. notably to investors.aided the bank to conceal $50bn debt for the market. this auditing firm was accused for this professional negligence by regulatory bodies of US. notably after the financial crisis. „Independence and objectivity are at the heart of an auditor‟s work. and without such principles audits are worthless.22 The independence of audits has become doubtful.

this thesis assumes qualitative research methodology. The research methodology for achievement of this work will be on studying on literature in the auditing profession. discussion papers.      Internet E-Books News Papers Journals Articles Financial Crisis articles related to Audit. Qualitative research is meant to develop explanations of social phenomenon. Since the thesis aims to examine the role of the auditor leading up to the financial crisis. specifically to the works written by authors from the UK and abroad: access to online databases. RESEARCH METHODOLOGY According to the nature of the topic. and publications from regulatory authorities. RESEARCH INSTRUMENT These are research instruments which I am using in my research.CHAPTER 3 STUDY/STRATEGY My thesis study and/or strategy are to examine the role of the auditor directing up to the financial crisis. journal articles. the research methodology that appeals to the achievement of this work is a study on literature in the auditing profession. . newspaper articles and websites. it is primarily interested in answering questions such as “how” and “why”.

to design a general framework that will manage the creation of audit reports that are concise. and the quality of management of main financial statements risks. Ideally. The banks during the financial crisis were unsuccessful to identify and to take necessary steps in reducing the liquidity risks. Auditors plan their audits to obtain a sensible level of certainty on the existence or nonexistence of material misstatement in the financial statements as a consequence of fraud and error. Many steps essential for reducing the risks of liquidity and marketing techniques by banks to conceal their poor status were used as well as using false and fake financial statements to encourage public to invest their money in it. Banking sector failed to maintain its position in the world by lack of trust and confidence of people because of financial crisis. and those that are in charge of corporate governance. during this process auditors should carefully consider the risk of material misstatement in financial statements as a consequence of fraud or error. reliable and effective.CHAPTER 4 DATA ANALYSIS Auditors plan their work. Banking sector mostly faced burden at the time of financial crisis. . Auditors should work hand in hand with regulators. the structure and effectiveness of monitoring authorities. Moreover. They object is to accumulate and assess audit evidence so as to form an opinion on the financial statements. financial statements are prepared and presented by firms to reflect their true financial situation. INTERPRETATION It is important to broadly and objectively look at the effectiveness of financial statements. many banks concealed their poor conditions by disclosing untrue financial statements.

and have a large option of firms. Many critics believe that because of the auditors' negligence. the financial crisis has brought the dispute on audit at the forefront. having a second auditor checking decisions and the procedure of strict quality control. regular competitive tendering and a larger role for companies audit committees in selecting audit firms are drastic. These changes include: placing a cap on total market for large firms. There has always been critical to audit practice. controls. Fraud under IAS 240 is determined as "intentional act by one or more employees among management. involving the use of deceit to obtain an unjust or illegal advantage. Michel Barnier recommended a few changes that should be made in the auditing profession. improving independence can limit audit and audit work.CHAPTER 5 RESULTS Auditors think that they have to be close to their customers to carry out efficient audit. However. rotation of auditors. conducting joint audits. In addition. business modeling and financial management to improve transparency in the audit that is said in these difficult times. In this respect. Gray and Mason reason that audit regulatory bodies should include non-accountants as members to increase public confidence. Auditors can also help affected local companies. auditors do not want to or are ready to make drastic changes. those charged with government officials or third parties. auditors' negligence can produce very serious issues like financial depression. ICAEW believe that the role of the audit should be expanded to include risk management. . especially if one company goes below. They also responded to the lack of independence of the acceptance of the principle of rotation. the financial crisis of 2008 was made worse. Auditing profession is gracefully evolving." Auditors are responsible for auditing process to examine the validity and reliability of financial activities and financial statements of organizations.

the response to past corporate failures remained unchanged. The thesis discusses three main topics of the changing audit environment. the audit profession is experiencing a cultural challenge. The crisis has made us realize the importance of reliability and validity of audits. the need for real certainty about the exact backward looking financial statements. The Treasury Select Committee has inquired the significance of direct extensive and all the time more elaborate audits. However. As soon as the action is taken the better will be the future perception of the value of audits. The discussion paper stressed. they were not identified exorbitant and systematic risks that nearly sank the global banking system. However. The financial crisis has exposed deep seated feebleness in the prudential regulation and supervision of financial institutions. . where the fine balance of risk and reward has created a world of caveats. the system failed and therefore no aspect of the global financial market is going to be same again. Auditors are at the junction. their objectivity criticized. when an individual audits were not successful. First.DISCUSSION The time has come for the audit profession to embrace a change in circumstances in which the value of audit came under increased scrutiny and criticism. Currently FSA and FRC issued a discussion paper on the contribution of Auditors to prudential regulation. the environment in which auditors operate is very litigious. The auditor takes the risk of being sued as a result of corporate failure or financial loss suffered as a result of failed audits. Auditors' independence is considered controversial. the need for auditors to challenge management and whether the auditor has been satisfied with management. and ethical behavior called into question. if the audit profession continues to respond in the same was done in the past. among a myriad of issues. It is evident that regulatory bodies are not going to bury their heads in the sand. Second. It is very important to understand the environment in which auditors operate. there is a real risk that auditing profession would become irrelevant to more challenging and dynamic market. The audit profession has to get control of this opportunity to implement positive changes to maximize the value of audit and its important role in the protection of the financial system. This is a challenging and audit professionals should look forward to these changes.

how can auditors' importance to be improved? Three ideas that could see better use of audit skills are presented with a goal of ensuring that auditors provide a real confidence. auditors could work devotedly with stakeholders to design a report that more than a contrarian and forward looking. compulsory report could then be given to audit committees and regulators in line with the needs of stakeholders. CONCLUSION This thesis is outlined some of the challenges experienced by auditors in the current business environment. systematic risk and operational risk which is the most challenging to quantify. without fear of what the auditors think in short. They have their own rules which are important for any successful operating domestic and global market. and who are in charge of corporate governance. The framework must be built on ethics. Auditors should work hand in hand with regulators.financial institutions are unique. . comprehensible and coherent way. some of these practices are already in the market. audit reports need to express themselves. "public". In fact. but a report that will give situational based view of risk. a very simple but important fact . But the question remains. the structure and effectiveness of monitoring authorities. However. This is why it is difficult to regulate and even more difficult to audit such institutions. creditors and accounts depositors could have done better with the understanding of their own risk in any financial institution. and the quality of management of key financial institutions risks. working against the risk of being too dictatorial and being litigated. reliable and effective. In fact.Third. what this dissertation is to support is far from subjective and thematic approach which most believe to be a mere box ticking and watching. Most people have debated that financial institutions were developed in large and complex entities of both product and system point of view. there are merits to make such a report. Essentially. a good example is the Sox regime in the America. For example. Firstly. Independent voice raising comments about the risks of an institution is a valuable form of assurance that is likely to be gracefully welcomed by stakeholders. liquidity risk through credit risk. to design a common framework that governs the creation of an audit report that is concise. although debatable. Key stakeholders such as investors. it is important to objectively look at the effectiveness of financial institutions tables.

a comprehensive assurance. more concerted and subjective framework of financial information. and it is colossal coincidence of interest in ensuring that the investment world is safe for both depositors and investors.Secondly. Very excellent movement could provide a mechanism for this recommendation to happen would be the integration of the FSA in the Bank of England. breaking the notion that they are under control. Finally. This is by Auditors and regulators along with the responsible corporate control will work much more as partners. The industry is now left with only four big firms and these firms are severely berated for lack of competition. . institutional changes need to be made to push for a broader. Furthermore. then the end result will be an ugly process of a typical box tickers. rating agencies remained unharmed. Even more important concern is what might happen if the company ends up with only three firms. auditors need to get out of the silos. By combination the FSA prudential reporting with the interval insights of the audit. On the other hand. from a prudential point of view. there is also a need to develop an oversight team in charge of potential bubbles and auditors should be part of that team. This thesis assumes that these three recommendations. but part of the main characters of the crisis have been to other financial institutions and hedge funds and continued to practice in the market. There was no good and bad rewards for failure. The existing overlap between the audit process and regulatory compliance is obviously evident. stakeholders can be sure to get what they need. as presented above would be of valuable importance to the developing regulatory landscape that is now more and more the pursuit of the financial system in various ways. Continued premise on the wide held public view that auditors "did not trust" and pressing the same old screws. To call attention to and mitigate the effects of systemic risks is a crucial need to solve a complex set of puzzles.

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