Topics: Audit, Financial audit, Auditor's report Pages: 5 (3566 words) Published: November 12, 2014
Research Journal of Finance and Accounting
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol.4, No.6, 2013


Audit Practice in Global Perspective: Present And Future
AbdulFattah AbdulGaniyy
Department of Accountancy, The Federal Polytechnic, Kaura Namoda, Nigeria. * E-mail of the corresponding author:abuaishah1425@yahoo.com Abstract
This paper discusses the history of audit and its development particularly Enron and Worldcom scandals as some of the audit failures that increased the challenges of auditing firms to remain unbiased and independent of their clients. Secondary data was used to review the existing literature on the subject. Descriptive method was used to present the changes that occurred in the historical development of auditing. It traces the evolution of audit into a field of fraud detection and financial accountability to the advent of Industrial Revolution of 1750 to 1850 and states that as business increased in complexity, risk-based auditing makes auditing more efficient and economical than before. It highlights the global developments in audits. The author posits that as business environment gets more globalised and complex, auditing would be more challenging and the quality of the professionals involved in audit would be very important in maintaining audit quality. Keywords: Audit, Auditing, Historical Development, Audit Challenges, Accountants, Professionals. 1 Introduction

Audits are performed to manage and confirm the correctness of a company's accounting procedures. Auditing evolved as a business necessity once it became evident that a standardized form of accountancy must exist to avoid fraud. It has developed into a standardized yet complex field that is regarded as an important procedure in the management of business finance.

This paper discusses the history, development and future of audit. It is divided into seven sections. Section one introduces the topic by highlighting major audit failures in recent times. The historical development of audit at the global level and the Nigerian experience are discussed in section two. Sections three to five discusses the current audit practices while the major challenges of auditing were highlighted in section six. Section seven concludes the paper with an emphasis that though auditing as a profession is currently facing a lot of challenges but these are not insurmountable provided ethics of the profession is strictly adhered to and auditors are truly independent of their clients.

2 Historical Development of Auditing
The collapse in the US of Enron and Worldcom, together with their auditors, Arthur Andersen, has focused the public spotlight on the company audit and made it a highly controversial aspect of the accountant's work. In Britain, the recent legal action by Equitable Life against Ernst and Young is only the latest in a long line of scandals at BCCI, Maxwell, and the Barings bank, among many others. A History of Auditing for the first time lifts the lid off the work of the auditors, and details how historically they have got themselves into the present situation. The resulting history traces the evolution of the auditing process from its leisurely Victorian beginnings where armies of clerks checked and ticked everything in their client's books, to the transformation in the 1960s when, with the growing scale of clients auditing became more a matter of checking a client's systems rather than the records themselves. The changes in the 1980s are also documented when because of the growing pressure on audit fees from clients meeting the threat of global competition; auditors began to put their faith in such nebulous techniques as risk assessment. Alongside all these changes auditors also had to cope with the advent of computerization which robbed them of the audit trail.(Derek,2006) According to Tanko( 2011), auditing has its history to a large extent determined by the history of accounting, as the latter...

References: ANAN(2008) : Association of National Accountants of Nigeria www.anan.org. Retrieved August, 2011
in Nigeria : Challenges and Prospects – A Publication of the Society of Women Accountants of Nigeria (SWAN)
Beasley, Carcello, and Hermanson, (2011) : Top 10 Audit Deficiencies :Lessons from fraud-related SEC cases
Cadbury (2006):Nigeria’s Enron: nigeriaworld.com
Chukwunedu S
SSRN:http://ssrn.com/abstract=1730705 or
Derek Matthew (2006) : A history of auditing – The changing audit process in Britain
Francis, 2006.
Gupta Kamal (2004): Contemporary Auditing-Tata MacGraw-Hill Education 6th edition.
Hasyudeen Nick (2009):Audit profession-Global Development and Key issues-www.slideshare.net
History of Auditing-www.ehow.com/Business ICAN (1965 ) : Institute of Chartered Accountants’ Act 1965
Lee, K. (2009). “Why and how to adopt green management into business organizations? The case study
Korean SMEs in manufacturing industry,” Management Decision 47(7), 1101-1121.
Onwukwe, Dan (2012): Subsidy probe report: Are good accountants bad auditors? In Sun Newspaper, May 1,
Rostami , V. (2009): Audit Expectation Gap: International Evidence. International Journal of academic
Research, 1(1),1 40-146
Salehi, Mahdi(2008): Audit expectation gap: Concept, nature and trace . Published by African Journal of
Business Management Vol
Tanko, Muhammad (2011) : Audit Expectation Gap: The Trend to Close the Gap in the 21st Century. Research
commissioned by The Institute of Chartered Accountants of Nigeria ( ICAN).
The Association of Chartered Certified Accountants www.accaglobal.com/af
Watts R and Zimmerman J (1983): Agency Theory and the Role of Audit
Welch Ian (2011) : Reshaping Audit for the new Global Economy; www.acca.
Wikipedia, 2011:en.www/wiki/Enron. Retrieved, August,2011.
Wikipedia, 2011:en.www/wiki/WorldCom. Retrieved, August,2011.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay on accg340 2013
  • 2013 Essay
  • 2013 Essay
  • Assurance Study Guide 2013 Essay
  • Mba 2013 Essay
  • irs 2013 Essay
  • Essay on Games in 2013
  • 2013 Analysis Essay

Become a StudyMode Member

Sign Up - It's Free