Top-Rated Free Essay
Preview

Hk Audit

Satisfactory Essays
329 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Hk Audit
With regards to the current regulatory system in Hong Kong, discuss whether auditors are independent in order to protect investors’ interests of Hong Kong listed companies.
Auditor independence refers to the independence of internal or external auditor that may have the appropriate capabilities, competence, authority and time to perform their duties and responsibilities. Independence also requires the integrity, objectively, professional competence, confidentially and professional behavior to audit planning and audit process. To prepare of informative, accurate, and independent audit reports, the auditors of listed company are independent in order to protect the interests of investors.
The independent auditor must have the professional qualifications with the education and audit experiences. They should be straightforward and honest in professional audit process and business relationship. They should be express the recommendation for the truth and fairness of the financial statement, and comply with the guidelines, professional codes or standards issued by HKICPA, Hong Kong Stock Exchange and other professional or statutory bodies. They should have expertise in the accumulation of audit evidence, monitor and enhance the effectiveness of internal control. They should identify the area of weakness and inefficiencies or any possible of errors in its system of internal control, then they can provide the effective recommendation to increase the related area efficiency and facilitates the prevention and detection of errors
The fair presentation of financial statements is behaved in conformity with the guidelines, professional codes or professional standards that are an integral part of management’s responsibility. Based on the information is provided by the listed company, the independent auditor can make the recommendation for the content or draft of financial statement in whole or in part. The responsibility of the independent auditor is confined his professional audit opinion on the financial statements for a true and fair view.
Finally, an independent auditor can provide the independent audit that enhances the credibility to the financial statements of the listed company that giving confidence to the board, shareholders, bankers and investors etc.

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Health Mgmt

    • 328 Words
    • 2 Pages

    1. Professional standards do not prohibit auditors and client personnel from being friends. The turning point for when an auditor-client friendship violates the auditor independence rule is when the auditor is not longer independent in fact and auditor becomes less skeptical. An auditor’s independence is impaired when, in light of all relevant facts and circumstances, a reasonable investor would conclude that the auditor would not be capable of acting without bias. Mei-ya Tsai should have used professional skepticism when learning about the inventory in transit. An auditor and their client can maintain a friendship until the auditor starts over looking red flags and lacks professional skepticism. An audit-client friendship will still affect the concept of independence because even if the auditor remains independent in fact, the investing public might not believe so.…

    • 328 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Case Stuy 8.1 Livent Inc

    • 306 Words
    • 2 Pages

    Explain why some corporate executives may perceive that their independent auditors are a “necessary evil.” How can auditors combat or change that attitude?…

    • 306 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Smackey Dog Food

    • 2442 Words
    • 10 Pages

    When auditing a publicly held company, auditors need to observe principles. The ethical principles of the American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct are independence, responsibilities, the public interest, integrity, objectivity and independence, due care, and scope and nature of services. More specifically, audit team members are required to be objective and independent with regard to the audit by maintaining objectivity and being free of conflicts of interest in discharging professional responsibilities and by being independent in fact and appearance when providing auditing and other attestation services. Through this one can see how influential the SEC is. Under the Sarbanes-Oxley Act of 2002, auditors have to be objective and independent otherwise legal sanctions can be incurred.…

    • 2442 Words
    • 10 Pages
    Powerful Essays
  • Good Essays

    Answer: Independence is a fundamental principle for an auditor. If the auditor is not independent of his/her client, users will lose confidence in the auditor’s ability to report on the financial statement. I need to make sure whether all members are independent. It is important to check whether Eric is independent auditor of the client.…

    • 793 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Case 1

    • 961 Words
    • 3 Pages

    When an auditing firm’s clients are large, high-risk clients for relatively high audit fees, there is a risk that independence will be compromised if it has the potential to end the relationship with a profitable high-risk client. Add to this, the client having a high audit risk, and it has the potential to make the audit…

    • 961 Words
    • 3 Pages
    Good Essays
  • Good Essays

    ---The external auditing profession as a whole has became more concentrated on maintaining auditor independence and it is now one of the cornerstones of quality auditing. One way that independence can be violated is when an auditor shows bias towards an important user of the financial statements. Management, stockholders, bondholders, and taxing and regulatory companies are all important users that the profession has tried to avoid showing bias towards. The SEC has written principles that show independence is impaired when an auditor acts as management or an employer of the audit client or if the auditor is in any position of advocacy for the company. The AICPA also states that there are safeguards in place to avoid independence problems. Some that prevent potential bias are audit partner rotations of every 5 years, not allowing nonaudit work to be done by the external auditor, and rotation of senior engagement personnel. Overall, many things have been done to prevent potential bias towards particular users because it ruins the integrity of auditing.…

    • 1523 Words
    • 5 Pages
    Good Essays
  • Good Essays

    If You Need

    • 883 Words
    • 4 Pages

    This section outlines specific relationships that impair auditor independence. There is a provision for other considerations that defines the reasonable person test for determining if there is a threat to independence.…

    • 883 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Chapter One

    • 5480 Words
    • 22 Pages

    A large corporation with securities listed on a stock exchange is required by the rules of the stock exchange and by the rules of the Securities and Exchange Commission to provide an audit report with the annual financial statements furnished to its stockholders. It also is required to engage the auditors to provide an opinion on its internal control. Apart from legal requirements, however, a large listed corporation recognizes that it must maintain investor confidence in the reliability of its financial statements and internal control over financial reporting if it is to continue to be able to…

    • 5480 Words
    • 22 Pages
    Powerful Essays
  • Powerful Essays

    The Auditor 's Report Volume 23, No. 2, Winter 2002 – An Update on Auditor Independence by Douglas F. Prawitt, Brigham Young University http://www.accounting.rutgers.edu/raw/aaa/audit/Pubs/Audrep/00winter/item04.htm…

    • 1788 Words
    • 8 Pages
    Powerful Essays
  • Good Essays

    Independent audit in turn makes the financial statements more credible and reliable source of information for both owners and creditors about the managerial efficiency and effectivity of the company’s operations.…

    • 1666 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Auditor Independence - 3

    • 570 Words
    • 3 Pages

    Auditor independence requires auditors to take an unbiased viewpoint in the overall performance of the audit report, and therefore maintain the fundamental principles of integrity and objectivity. Auditor independence is possible, however it is quite hard to achieve as it requires auditors to meet all the guidelines set out by AASB and statutory requirements.…

    • 570 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Harris Scarfe Fraud Essay

    • 3063 Words
    • 13 Pages

    In this case, Harris Scarfe did not effect on the independence and the audit committee is just nominally independent. The members of Harris Scarfe audit committee from 1998 to 2000 are as follows: Patten is the independent director. Trescowthick, executive Chairman, is no-independent. Hodgson, Chief Financial Officer, is non-independent.(Psaros&Seamer, 2001). Obviously, most of the members of its audit committee are non-independent, and Hodgson was from the senior management. The two auditors did not get accurate information from this audit committee, which also resulted from the poor corporate governance. Some of the directors of audit committee are also from the management, which is easier for them to conceal their illegal or unethical behavior, with the result that the internal and external auditors were restrained by the management. Under this situation, the independent guideline is not available, so that Harris Scarfe’s auditing process can not proceed…

    • 3063 Words
    • 13 Pages
    Powerful Essays
  • Good Essays

    Operation Broken Gate

    • 1045 Words
    • 5 Pages

    Additionally, they even placed their own interest before the public interest through reducing audit work to make the audit process easy for the client. These issues clearly violate the independence objectivity principle which the auditor must have and maintain in order to provide professional audit service. According to the Revised AICPA Code of Conducts, Sub section 01 and 02 of principle 0.300.050 “Objectivity and Independence,” there must be no mutual or conflict interest created between the auditor and the client in order to maintain auditor independence. Objectivity is very important in accounting profession since maintaining objectivity helps auditors make unbiased decision or make decision free conflicts of interest when facing unethical issues. Additionally, independence is an important to keep an auditor from involving to any relationships that may impair auditor’s objectivity. Therefore, in my opinion, a CPA auditor cannot be objective without being independent. Mutual or conflicts interest is the most essential issue which lead a CPA auditor to be not independence and easy to make a favorable or unfavorable decisions which benefit the auditor first while offering the attest service. Conversely, without being…

    • 1045 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    GE Case

    • 472 Words
    • 2 Pages

    1. Requirements of Sarbanes-Oxley related to nonaudit services such as the design and implementation of financial information system and internal audit affect perceptions of the auditors’ independence for two reasons. The first is because of the potential conflict between these services and the audit work which affect the independent of the auditor. Second, because these services increase the revenue of the accounting firm from one client, which can make the client a major revenue source for the accounting firm, and hence makes the accounting firm depend on the existence of the client. This problem happened with Arthur Anderson when it provided extensive services to Enron prior to its failure.…

    • 472 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Auditor's Independence

    • 12387 Words
    • 51 Pages

    4.6 Servicing as Officer or Director on the Board of Assurance Client - BSA (Para: 290.149)…

    • 12387 Words
    • 51 Pages
    Satisfactory Essays

Related Topics