Audit Postulate

Topics: Audit, Financial audit, Auditing Pages: 5 (1352 words) Published: January 4, 2013
Shockley produced a conceptual design based on certain aspects that are considered to have an effect on the auditor’s capability to endure stress. It has been suggested that, given the shut working connection between auditors and customers and the fact that auditors are paid by their customers, it is emotionally impossible for an auditor to be free from prejudice. Numerous aspects of concern have been noted in the literary works for many years.

Shockley’s conceptual design highlighted on recognized mobility because being seen to b impartial is just as essential from the perspective of adding reliability to the subject of the examine as actual mobility. He has given some algebraic equations to explain the functional credibility of the above 8 aspects.

1.Provision of MAS solutions by the auditor:
As the opportunity of the solutions performed for the consumer by the examine organization increases, the connection between control and auditor becomes more close. Shockley’s conceptual design shows both a good and a bad effect of offering these solutions on the auditor’s mobility. From a good perspective, offering MAS solutions raises the value of the auditor to the consumer because of the valued solutions offered, therefore raising the habit of the consumer on the auditor which in turn creates it much simpler for the auditor to endure stress given by the consumer and prepare mobility. On the other side, if seen from a bad perspective, supply of MAS solutions raises the dependancy of the auditor on the consumer because of the included charges given to the auditor thus reducing the auditor’s capability to endure stress with a major unwanted effect on recognized mobility. In this case, a second consideration has come regarding the dimension the examine organization. As per Shockley’s conceptual design, a huge organization may be less reliant on a particular customer therefore having a little unwanted effect on recognized mobility. Whereas, your business being more reliant on a particular customer may have little capability to endure stress leading to a detrimental effect on recognized mobility. Moreover, MAS may have a direct unwanted relation with recognized mobility because of concerns that the auditor may become a quasi-employee or an recommend of the consumer, may have a financial interest on the success of the business or be placed in the position of auditing his or her own judgements. Here, the dimension the examine organization also plays the function as in little expert companies the auditor and the consultant are frequently the same person whereas in huge expert companies there is a compartmentalization of examine and consultant solutions. Finally, MAS raises the value of the auditor to the consumer because of the solutions offered which raises the likelihood of any time period with a major unwanted effect on recognized mobility.

2.Competition in the auditing profession:
According to Shockley’s conceptual design, rivalry for examine customers has both a good and a bad effect on recognized mobility. Competition for examine customers creates it more likely that the obligatory auditor will be changed by an auditor prepared to agree with control thus raising examine habit on the consumer which is a increased danger for lesser companies. Competition might result in inadequate examine quality because of insufficient mobility. In contrast, rivalry may cause period to reduce, thus enhancing recognized mobility.

3.The time period the auditor has been in office:
As period raises, so too do thoughts that the auditor may be more extremely versatile to the consumer. The decrease in recognized mobility may develop from such any time period. That is why it has been suggested that, examine companies should be aimed which brings the additional benefit of automatic checks of the work of the previous auditor, stimulating examine advancement and frustrating complacency. However, any time period may have results as it...
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