Ethics and the Auditor

¶ … auditing comes with immense responsibility as it plays a vital role in maintaining a check and balance and establishes an organization's credibility and repute among its stakeholder. An auditor's report is a key document that most stakeholders use when taking decisions pertaining to an organization. For this it is important for auditors to show highest levels of compliance with ethics. Auditors and Ethics Audit and Ethics have a very deep relationship as one goes with another.

Financial audit of clients needs to be ethical and it is an area of major concern as these companies hold the public stake. The base of ethical auditing is independence and beneath it lies the principles of honesty, professional diligence and due care, integrity and confidentiality. The basic part of ethical auditing which is independence focuses on the auditor's strict adherence to the maintenance of independence from having a financial interest in its clients.

The world's major chartered accountant bodies have framed a standard code of conduct for auditor's compliance on an internationals level. Its main component focus on the basic principles through which any misappropriate or deceptive audit opinions can be prevented. Another part of concern regarding audit is the confidentiality of the audit client and this is one of the basic principles of the code of ethics. Many companies have seen their trade secrets or other integral information being leaked due to confidentiality issues on the part of the auditor.

Maintaining confidentiality is as important as other principles and breach of this principle can have serious financial and legal consequences for the company and the auditors themselves too. Having discussed the two major principles of independence and confidentiality above, Integrity is the principle of audit ethics that most of the auditors lack these days. This is a principle of audit ethics which is very much ignored in practice due to time and other constraints on the auditing engagement.

Integrity implies that a professional accountant should be straightforward and honest in all professional and business relationships. Though what defines the honesty of an auditor is difficult to elaborate exactly but the basic part involves an auditor to be honest in its dealing with the client and the audit field work performed which forms the basis of the audit opinion.

Dishonesty has the consequences such as giving an inappropriate audit opinion which can harm the auditor the financial interests of the public in the company as they would not be able to see the true picture (Hall & Renner, 1991). Objectivity is another pillar of code of ethics that requires the auditors to be unbiased, prevent conflict of interest or undue influence of others to override professional or business judgments.

If an auditor is not acting objectively during his field work then he may be susceptible of any influence by the client which may lead overlooking of crucial and critical audit areas. The principle also says that the auditor must be unbiased and he should think independently of any other factor that is not in any way related to the auditing engagement he is part of. The code of ethics ensures that the audit is being carried out by a professional auditor which is the.