Auditing 8 Essay Example | Topics and Well Written Essays - 1250 words

Auditing 8 - Essay Example the bank accounts of the business so that they are able to determine the financial aspects they are needed to have findings on such as revenue, asset base, and cash flows. Full disclosure also has the impact of keeping finances and the operations of accompany open and transparent (Crist, 2009). Not disclosing an account containing $500,000 is gross and has the impact of rendering the auditors work unsatisfactory. It is negligent on the part of the new owners not to be aware of the existent of such an account. To avoid compromise, the auditor should note this in the final report. 2. According to Securities and Exchange Commission actions needed to improve Public Company Accounting Oversight Board selection process. (2002); a public accounting company shall be deemed to be independent in the performance of professional services like auditing of clients as stipulated by the standards promulgated by the bodies authorized by the council such as SEC, DOL or AICPA SEC. The independence of a public accounting company will be considered impaired with regards to a client when the employee of the accounting firm gets employed by the client after leaving the accounting firm unless some conditions are met. However, it is not easy to mention instances when the appearance of independence may be in question. Depending on the type of auditor employed by the firm, they can be paid in terms of audit fees or audit salaries (Funnell, & Robertson, 2005). Audit payments are competitive with the sole objective of ensuring that auditors do not indulge in unethical, unfair practices in the process of their work. To give the true and fair position with regards to a client’s financial position, auditor’s independence is paramount. 3. Representation letters are quite different from audit evidence due to the fact that they may involve transactions with massive impacts on the financial statements of the company without being able to produce corroborative evidence (Engel, 2005). Given the