Auditing"the profession of auditing exits mainly because it is a statutary requirment for incorporated companies. if such requirement was not, there no one will engage the services of auditors" Do...

Auditing

"the profession of auditing exits mainly because it is a statutary requirment for incorporated companies. if such requirement was not, there no one will engage the services of auditors"

Do you agree with statement? Provide reasons in support of your anwer.

Asked on by hassan22

8 Answers | Add Yours

litteacher8's profile pic

litteacher8 | High School Teacher | (Level 3) Distinguished Educator

Posted on

I don't agree. Shareholders want to know that a company's financial statement is legitimate. There are other instances, such as banks if the company needs a loan. Other comLanier that might want to partner would also have interest.
belarafon's profile pic

belarafon | High School Teacher | (Level 2) Educator Emeritus

Posted on

I would not necessarily agree with the statement. Although most professional auditing companies exist because of laws requiring accountability, I think that public pressure and private auditing firms would act in much the same method without those laws. One major problem with private auditing firms today is that they must continue a business relationship with their clients; if they return a bad audit, they might be passed over for the next audit. In this sense, publicly instituted auditing firms are slightly better able to perform in objectivity; they can give an honest report without worrying about being "fired" next year.

hassan22's profile pic

hassan22 | Student, Undergraduate | (Level 2) eNoter

Posted on

Now we come to main point that if auditing is not a legal requirement then why one should engage them for auditing service. Requirement sounds like need just like water, oxygen etc. If it is not our need of drinking and inhaling it doesn’t mean they are useless, these are cates we still use them for other purposes like we use water for clothes washing and oxygen for is a poisonous against bacteria and also in rocket liquid oxygen burns fuel and generate lift. The motive of this debate was to clarify that if auditing profession is not a legal requirement but still incorporated companies cannot neglect them due to their importance. Public believe on the report of auditor’s and their reports are very helpful for companies to boost the confidence of investors, can get loans easily, and in public they remain updated regarding profile of goodwill.

In the end I hold opinion that if services of auditor’s are not legal prerequisite but profession of auditing plays a healthy role in the carriers of incorporated companies. Although auditing profession exists because of the laws requiring accountability. I believe, due to load of public the private auditing firms would act in much the same method without those legal requirements.

Thank you very much for provied detail

fruitypabbles's profile pic

fruitypabbles | Student, Undergraduate | eNotes Newbie

Posted on

Now we come to main point that if auditing is not a legal requirement then why one should engage them for auditing service. Requirement sounds like need just like water, oxygen etc. If it is not our need of drinking and inhaling it doesn’t mean they are useless, these are cates we still use them for other purposes like we use water for clothes washing and oxygen for is a poisonous against bacteria and also in rocket liquid oxygen burns fuel and generate lift. The motive of this debate was to clarify that if auditing profession is not a legal requirement but still incorporated companies cannot neglect them due to their importance. Public believe on the report of auditor’s and their reports are very helpful for companies to boost the confidence of investors, can get loans easily, and in public they remain updated regarding profile of goodwill.

In the end I hold opinion that if services of auditor’s are not legal prerequisite but profession of auditing plays a healthy role in the carriers of incorporated companies. Although auditing profession exists because of the laws requiring accountability. I believe, due to load of public the private auditing firms would act in much the same method without those legal requirements.

fruitypabbles's profile pic

fruitypabbles | Student, Undergraduate | eNotes Newbie

Posted on

An auditor’s report is considered an essential tool when reporting financial information to users, particularly in business. Since many third-party users prefer, or even require financial information to be certified by an independent external auditor, many auditees rely on auditor reports to certify their information in order to attract investors, obtain loans, and improve public appearance. Some have even stated that financial information without an auditor’s report is “essentially worthless” for investing purposes.

The manner in which auditors perform their duties and the auditing profession in general raises questions and puts the auditors on the spotlight from clients who rely on their reports. It shows that why incorporated companies appoint auditors. They appoint them for clean audit reports because free of error and frauds reports provide comfort to companies to attract investors, obtain loans and enjoy goodwill. This proves that how much profession is necessary and legal requirement for incorporated companies.

fruitypabbles's profile pic

fruitypabbles | Student, Undergraduate | eNotes Newbie

Posted on

It is a controversial statement. People which have studied and are still studying auditing subject knows very well that jobs of auditing exists because this profession is a legal prerequisite for incorporated companies, but according to the declaration no body should engage auditors if it is not legal requirement gives this speed a dramatic turn and opens a door of controversy. Due to controversial nature of topic, I am not in favour or against this avowal.

I should elaborate both sides of topic to clarify that what is more close to the reality. As we know in profession of auditing, the auditors make reports. This auditor report is a formal opinion or disclaimer thereof, issued by either an internal auditor or an independent external auditor as a result of an internal or external audit or evaluation performed on a legal entity or subdivision thereof (called an “auditee”). The report is subsequently provided to a “user” (such as an individual, a group of persons, a company, a government, or even the general public, among others) as an assurance service in order for the user to make decisions based on the results of the audit.

hassan22's profile pic

hassan22 | Student, Undergraduate | (Level 2) eNoter

Posted on

I would not necessarily agree with the statement. Although most professional auditing companies exist because of laws requiring accountability, I think that public pressure and private auditing firms would act in much the same method without those laws. One major problem with private auditing firms today is that they must continue a business relationship with their clients; if they return a bad audit, they might be passed over for the next audit. In this sense, publicly instituted auditing firms are slightly better able to perform in objectivity; they can give an honest report without worrying about being "fired" next year.

Can you please give me a detailed note on this topic. this is my project.

hassan22's profile pic

hassan22 | Student, Undergraduate | (Level 2) eNoter

Posted on

Auditing

"the profession of auditing exits mainly because it is a statutary requirment for incorporated companies. if such requirement was not, there no one will engage the services of auditors"

Do you agree with statement? Provide reasons in support of your anwer.

the word in first line EXISTS

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