The Audit Quality Forum was established with the primary purpose of reinforcing confidence in financial reporting. Statutory auditing promotes confidence because auditors are likely to give external and objective opinions on the presentation and preparation of financial statements. Auditors are required to be independent in opinions expressed, and their work is greatly based on real world. This is challenging in particular national settings. Recently, standard setters, audit practitioners, and regulators embraced significant steps in enhancing confidence within quality of financial statement audits, considering the challenges faced in leading capital markets. IT auditing is critical to any organization. The existence of legislations and standards has ensured that auditors offer independent opinions and that their work is greatly based on real world. This study however shows that this is challenging in some situations as seen in the comparisons provided.
Latest initiatives have focused on an international scope as there have been perceived failures in audits involving financial statements and operations in various countries. Therefore, initiatives have endeavored to promote consistency within nations in regards to what auditors must do and what users of financial statements must expect from an audit. The initiatives entail:
Widespread adoption and strengthening of international quality control standards and International auditing standards issued by the Assurance Standards and International Auditing.
Implementing and updating of the national statutory audit directive of the national commission
Establishing national independent audit oversight agencies like agreements that national regulators conquer to depend on each other's work
While it is crucial to acknowledge the significance of such initiatives in enhancing audit quality, there are deeply embedded national environment features that pose challenges for global consistency in audit quality. Evaluation of legal, economic, political, and cultural differences is challenging and prone to accusations of arrogance and misinterpretation. Regardless of the related sensitivities, understanding national differences is necessary in the appreciation of limits to the feasibility of auditing consistency and promoting global consistency in audit quality (Rittenberg, Johnstone & Gramling, 2012).
This study aims at achieving the following set of objectives:
Raising global awareness about the effects of national differences on audit quality and stimulating further research and studies on issues highlighted in this study
Identifying barriers to attaining global consistency in audit quality by taking into account how national differences affect the application of standards
Highlight the key risks that standard setters, audit firms, academicians, governments, and regulators think about and approaches to address them for the benefit of global businesses and investors (Bode, 2007).
This paper utilizes both primary and secondary information identified with auditor independence regulation. The primary exploration depends on explanations from expert bodies from the nations. Information from secondary research literary works and published journals is also important. Subsequently, the primary research has empowered this study to analyze and distinguish distinctions around comments issued by professional bodies (Wright, Freedman & Liu, 2008). It is highly unlikely that articulations issued by the expert bodies may be broken down by utilizing secondary information. Data identified with auditing standards can just be obtained from the websites of professional bodies. Besides, optional information is likewise significant for this study to come a close the discoveries and comes about with the distributed literary works. This has empowered the researcher to give recommendations and conclusions of the research. The accompanying paragraph illustrates several explanations why the researcher favored not to utilize the other alternative methodologies (Gramling & Rittenberg, 2014).
The methodologies including directing interviews, surveys, and questionnaire may have been utilized for this thesis. Nonetheless, the researcher has prioritized the critical examination of information published and identified with auditor independence over the methodologies said above. Numerous elements influenced the researcher's decision for leading research. These components incorporate the nature of the study to be directed and detriments of methodologies specified previously (Weirich, Churyk & Pearson, 2012). The hindrances identified with these alternative methodologies are examined in the accompanying paragraph. The level of accuracy or interviews relies on the versatility of the interviewer overall precision of interviews can effectively be questioned. Directing interviews are extremely subjective in nature. Consequently, there will dependably be a peril of biases. Interviews are characterized by a few individuals but is extremely time consuming. This may be justified by the measure of time used by the researcher for every interview.
Questionnaires are ordinarily reputed to be a straightforward and brisk technique for distributing data. In any case, questionnaires happen after the occasion. It is more probable that members might disregard issues identified by the research. Questionnaires can generate diverse measures of information for the researcher. This can take a long time analyze. Surveys may be applied to almost numerous types of researches like political, market and social exploration (Singleton & Singleton, 2010). On the other hand, it has impediments where individuals sampled cannot answer questions because of vague inquiries. Moreover, the respondents might furnish the needed sentiment in view of politeness of the researcher. This paper includes the universal investigation of auditor independence regulation in four separate continents including Europe, America, Australia, and Asia. Besides, it is troublesome for the researcher to visit every nation and take care of travel expenses. In this way, the constraints like money, time and volume of data needed, these modes of research seem to be the most suitable (Bagshaw, 2013).
While acknowledging all these elements, the researcher has chosen to analyze electronically accessible literature. Scholars and global expert bodies also have critical and valuable information for this study. The accompanying piece talks about how the primary and secondary information has been gathered from this research. The primary information is obtained from diverse websites of professional bodies. The main source of primary information is the sentiments issued by these institutions after the failure of Enron. The secondary research incorporates the utilization of books, academic journals, and articles. The books are utilized from the college library in order to comprehend the fundamental concept of proposed research (Rittenberg, Johnstone & Gramling, 2012).
Articles are likewise utilized from the expert bodies' magazines, like the student manual provided by ACCA. Finally, journals have been l incorporated in the research acquired from online database resources. The databases utilized in this paper are Emerald, EBSCO, Ingenta connect, Proquest and SSRN. The Statements issued by the diverse expert bodies are gathered at the close of June until the mid of July. The second stage will be analyzing the collected primary data and contrast this data and the past research conducted. At that point, the researcher has examined the both primary and secondary information with a defined goal to distinguish the fitting steps to improve independence in IT auditing (Moeller, 2009).
Statement of the problem
This study will focus on the challenges facing the achievement of international consistency in audit quality. Because consistency is an integral element of standards, the study will view standards as a source of appropriate benchmark against which, potential impacts of national differences will be identified. This study will take the application of standards as a vital and an adequate condition in achieving audit quality. However, it is the scope of this study to research the nature of audit quality succinctly. As different countries are seeking to apply The International Auditing and Assurance Standards Board (IAASB) standards on varied forms, they are a point of reference (Knapp, 2013). These standards have not been applied for a long time. The notable efforts geared towards strengthening and revising them tend to respond to perceived challenges with auditing in leading capital markets in recent years (Gramling & Rittenberg, 2014).
Therefore, this study is a learning process of how these standards are adapted and adopted in various countries. The study will consider an analysis by referencing to the United States (U.S.) and the non-U.S. activities of U.S. companies. In fact, the national differences identified in this study are expected to affect the application of any national standards so long as those standards are applicable to activities outside the country of origin. In relation to this implicit assumption about standards, the study will recognize the sensitivities within these issues with no intent to suggest that any one national climate is better than another is countries are to apply a set of global standards (Singleton & Singleton, 2010). It is obvious that this study will raise the most relevant and current issues. It will take the angle that certain attributes of reporting environment may undermine the confidentiality of the information in financial statements. However, the study will recognize that implementing some elements of the standards in certain national settings may prove challenging and might have an adverse impact on businesses (Wright, Freedman & Liu, 2008).
The process of audit risk assessment may be influenced by the nature of national legal frameworks. In case property rights are not unmistakably built on the laws of a nation and if the government bodies have the authority to seize property, this can be challenging for auditors in making judgments about asset recognition and affirming proprietorship rights and commitments (Weirich, Churyk & Pearson,…