Factors Involved in Fraud Cases with External Auditors Essay

Factors Involved in Fraud Cases with remote Auditors - Essay ExampleAs financial statements re give way the functioning of the management, it is essential to maintain authenticity and reliability for avoiding fraudulent actions, while preparing such reports. The audited accountors express their views associated with the maintenance of authenticity and transparency by the management. They have been tending(p) the authority to assess these financial statements of organizations in order to judge the transparency of such information. They gather evidences in order to assure that the figures appearing in financial statements do not include material misstatement. The credibility of such reports is incremented by federal agency of the audit process carried out by the auditors. These reports audited by auditors have ample impact on the decisions of investors, bankers, creditors and other stakeholders. The economy is struggling hard for recovering from a tumultuous bit which is infeste d with severe corporate scandals associated with misconduct of the auditors which have resulted in losing investors confidence. Presently, greater emphasis is given on improving the credibility, accountability, transparency and trust associated with the information provided in financial statements (Romero, 2010). The present structure involved in the audit process seems to be very problematic. Most of the big organizations generally pay their auditors by means of a third party know as the audit system. There are cases where clients pull ahead these payments directly to the auditors. In such cases, there is an added incentive paid by the clients to the auditors for delivering favourable news. Now the nous which arises is whether such actions affect the tangible performance of auditors or influence them to lose their independence (Cooper & Neu, 2006). Actually, it does affect the real performance of auditors, thereby reducing the transparency and authenticity of the information in their audit reports. The auditors manipulate the figures in these financial statements in order to earn high incentives. This has become one of the most remarkable issues requiring imperative attention in the present scenario. The thesis would be conducted on the topic, Factors involved in fraud cases with international Auditors. It would be done by dividing the entire analysis into three segments. The study would highlight that the auditors are influenced in three different ways conflict in interest, double positioning threat and finally, the familiarity threat. Analysis contrast in Interest The auditors independence is the major area of concern in this study. It is known that the managers have an interest in misrepresenting, exaggerating or manipulating the information provided in the financial statements of organizations. It is expected that an independent audit report must provide unbiased and credible appraisal related to the financial status of an organization. The conditi onal relation of the auditors independence has been shown in American Institute of Certified Public Accountants (AICPAs) Code of paid Ethics. It has been made mandatory by various legal decisions, which are provided by the Supreme Court of joined States, in their opening quote. Recently, there was a series of events which has raised questions regarding the independence involved in the present practices related to accounting.