Profession of Auditing Evaluation of the Profession  Essay

Excerpt from Essay :

Profession of Auditing

Evaluation of the Profession:

The profession of accounting has undergone vast changes over the years, and the traditional accountant concerned himself or herself only with recording the financial transactions of individuals, organizations, and entities. This resulted in the accountant issuing a report annually which is a financial statement that is showing the position of the firm for multiple purposes. However today there are many non-financial reporting that are also gaining prominence and there are many auditing and accounting methods that are in vogue today as compared to the earlier eras. Accounting techniques even differ with the private and public sectors. (Hollingsworth; White, 1999)

Accountants are not mere service providers who more or less towed the lines that the management dictated. Earlier perceptions have been so. However the global changes have transformed the accountant as a responsible entity who has duties to the company and investors. This has to be understood in the primary context. Professionalism is to be maintained which involves adherence to the accounting rules and accounting practice. Today accountants have to comply with approved standards and they are now redefined in roles that give them managerial responsibilities. The accountants are professionals and therefore are expected to be up-to-date in their functions. They are to be current and at the same time diligent. Today the accountant is more of a consultant to management. Thus the accounting occupation has been transformed to an authority with occupational responsibility. (West, 2003)

Having thus emphasized that the auditors had a duty to the public to inform them of the financial difficulties of the company, they are also made liable for lapses in this account. Therefore the accountant has to acquire special qualifications that were not necessary before. Today it is a complex activity. Thus the accounting profession now requires qualifications that are bestowed by professional associations or institutes to ensure that the accountant has sufficient education and training. In view of the complications of the work, the accountants must attain a high degree of competence and be able to maintain the requisite standards and ethical values. Apart from this the accountant to day does not stop with the traditional role. As stated earlier the professional accountants are expected to do other expert services that are specialized and being capable of being performed by the accountant as a professional. (Davis; Stark, 2001)

Thus it is a very complicated and responsible profession that comes with a lot of responsibilities and liabilities. The auditor is responsible not only to the employers but to the government, and even the general public in case of corporations, and activities where social questions and social issues are involved. Auditing has branched off into many sub-categories and the accountant is expected to be well versed with all these nuances. These requisites are being explored one by one.

Audit is a Controlling Mechanism

The first important aspect of auditing is that it is intended to control and remove unwanted and even unethical activities in the firm or subject of the audit. This is important because though the corporations and business entities have internal controls in their system, they are not absolute. A control cannot be absolutely fool proof. In the case of large organizations the greater cost in implementing the internal controls can be offset by the quantum of assets it sets out to guard. In other cases the costs for creating internal controls may not be justified in terms of the benefits or the relative safety that is given to a lesser value of what it safeguards. The audit can bring about a change in this and show the exact nature and limitations of the control in the system. (Porter; Norton, 2009)

In today's world audit has become more important on account of the lean producing and cost cutting concepts. In other words cost cutting and protecting the system itself becomes paramount. Often what is set out to be protected may not match in value to the costs involved in most cases. Thus cost of implementation is the second limitation. The third is the fact that how much ever carefully the system is designed to create perfection and prevention of willful acts of dishonesty, there is no safeguard against collusion and the unintentional mistakes and errors that could occur by human failures and system failures and even faulty processes. Thus the internal control model presupposes faultless machinery that also includes the hiring of highly qualified and trained personnel. (Porter; Norton, 2009)

One example could be the way control is exercised over the cash flow and bills in the audit because this is the area where there could arise maximum discrepancies. There must thus be a control model for how the accounting for cash received over a counter is accounted for and controlled. One type of control is the cash register, and secondly the customer receipts prepared in duplicate is also a formal method. (Porter; Norton, 2009) These controls often are the methods of arresting financial irregularities and auditing plays the most vital role in bringing this about.

Ethics and Responsibilities

The auditors are in a way the keepers of the conscience of the entity they audit and are expected to bring about the fairness and honesty that is expected. Mostly they are expected to make the transactions transparent. Fairness is an important ethical quality that the accountant has to maintain. In the process of professional accounting, the accountant must have neutrality both in analysis and in the financial reports D.R. Scott in 1941 laid down the rule that the accounting process must be "fair, unbiased and impartial. They should not serve a special interest." (Riahi-Belkaoui, 1992)

After World War II there was a tremendous increase all over the globe in the quality of life. Along with that the quest for a solution of many social issues that is related to technology, ecology, energy, consumer problems, and corporate problems came to the fore. This has been changed ever more and made more challenging with globalization. All these have made the auditor a participant in creating policies and also bringing out social reports that would indicate the quality and progress of activities to the attainment of social goals along with the general subjects of audit. (Riahi-Belkaoui, 1992)

Accountants are looked upon to prevent or detect business fraud. The responsibilities of external auditors, internal auditors, and management all are found in the attempts at preventing fraud. (Farrell; Franco, 1999) Not only the auditor is to be diligent in preventing fraud, they are also the facilitators of the birth of a corporate entity. The accountants are the basis for setting up the company which involves creating the company prospectus to listing the company in the stock market and incorporation. There are multiple roles to be played by the accountant in creating documents, projections, statements and the taxation and registration aspects. Thus the accountant is also concerned with business ethics, and its codes are important for the business growth and creating trust in the market.

A business cannot survive if its operations are dubious and suspect. Big businesses that do not have ethical leaders have ultimately been exposed and the public have condemned them like Enron. The company became corrupt because the top executives and even its auditors were corrupt. They are also now looked upon to prevent frauds because fraud costs eat up business revenue. The auditor thus has the dual responsibility of not only protecting the company or business entity against fraud and misfeasance from within but also dons the mantle of the watch dog to ensure fairness to external interested parties like investors, shareholders and stock holders and is instrumental in protecting their interest through proper and accurate financial documents and forecasts that are unbiased and totally honest.


The audit and the accountant both have to be highly professional. Audit has to be conducted by auditors with high special qualifications that go beyond the traditional role of audit and accounting. Gone are the days when the auditor was merely concerned with cash flows, balance sheet and cost factors. Audit today means more complications that require in depth knowledge of costing, legal issues, financial markets, laws, and statutes that are changing with the times and even the basics of stock market operations and economic evaluation. Audit plays a very important role in the formulation of strategy for the business entity. The costs are the company's greatest weakness. The shareholder interests will have to be protected by increasing the company's net worth and for this cost appraisal and market appraisal will have to be done periodically. (Davidson, 2003)

Audits are the best check on the ground reality. That way the stakeholder interest can be guarded. There must therefore be a shared commitment absolutely to the core values of the company by all the constituents of the company. Ultimately the strategic thinking boils down to the rule that a strategic decision must achieve the requirement of allocating scarce resources to various departments of the company in such a way that…

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