Does the rotation of auditors improve the quality of auditing Essay - 6

Does the rotation of auditors improve the quality of auditing - Essay Example Rotation of auditors has also been argued to facilitate business organisations in developing better transparency in their financial reports. Moreover, auditor rotation is identified as a process assisting in better flow of information. Rotation also ascertains that the financial statements of a business organisation are reviewed frequently. In this manner, auditor rotation develops an increased accountability along with independence amid auditors. However, the policy of auditor rotation is identified to affect the audit quality to a substantial extent, as auditors with time span are aware of the risks and credibility that a business organisation is attached with. It is also ascertained that there are certain business organisations adopting the policy of auditor rotation, which are seemed to increase complexities as well as cost due to rotation during important business transactions (Whitehouse, 2013). In this regard, the essay emphasizes the audit quality and the policy of rotation o f auditors. Moreover, the essay discusses about the issues that are addressed by auditors’ rotation and explains the advantages and disadvantages associated with the policy of auditors’ rotation. Discussion Defining Audit Quality In the present business scenario, financial reports of companies are deemed to be quite essential elements of identifying the performances of business organisations. In this regard, both internal as well as external auditors play effective role in the preparation of financial reports suitably (Arrunada & Paz-Ares, 1997). Contextually, audit quality has emerged as an important aspect in relation to the audited financial reports that are prepared and presented. It is therefore deemed to be the auditors’ responsibility to discover as well as identify the shortcomings in the accounting system of an organisation in order to ensure that financial reports are prepared systematically and appropriately (Velte & Stiglbauer, 2012). Correspondingly , the policy of audit quality is generally argued as based on three important factors, which include disclosure of appropriate financial statements, ascertaining that the internal control system of an organisation is efficient and provide adequate warnings in case of frauds and misrepresentations (PCAOB, 2013). The Issue that are Addressed by ‘Rotation of Auditors’ The policy of rotation of auditors is thereby adopted by business organisations with the objective of ascertaining that financial reports are prepared and disclosed appropriately ascertaining better audit quality. The policy has been adopted in order to minimise the barrier of over-familiarity that may develop amid the management of an organisation and auditors with time. In this respect, business organisations have adopted this policy in order to safeguard and protect the interests as well as confidence of investors by ensuring that quality audited financial reports are disclosed every year, representing a r eliable information reflecting the current financial position of the company. The utmost objective of rotation of auditors is accordingly, to ascertain that auditing operations are performed effectively in order to enhance audit quality (PWC, 2013). In this regard, it can be comprehended

M6 Assignment Example | Topics and Well Written Essays - 750 words - 1

M6 - Assignment Example idence for the application of this theory involved the study factors influencing the choice of food and the impact of induced mood on the usage of condom. The study on induced mood and the use of condoms is anchored on the theory of reasoned action in which, intention takes a center stage in determining an individual’s behavior. According to Armitage, Conner and Norman (1999), the intention to perform a certain behavior by an individual is a function of his or her attitude and the subjective norm. Specifics outcomes about a given behavior in turn influence the attitude formed by an individual towards that behavior. Perceived social pressures especially from people close to our lives have been particularly found to have significant impact on the intentions of an individual to perform a certain health behavior (Armitage, Conner & Norman, 1999). This study suggests that the influence of attitude on the intention to perform a given behavior is exasperated by the combination of either a positive mood or negative mood (Armitage, Conner & Norman, 1999). The study on the effects of induced mood on the use of condoms involved 97 undergraduate students with half of the group subjected to negative mood induction and the other half to positive mood induction (Armitage, Conner & Norman, 1999). The attitudes of the participants were also assessed concurrently as well as their intention to uses condoms. The study found that in addition to attitude and subjective norm behavioral determinants, mood further influences the cognitive capacity of an individual thereby impacting on his or her intentions or decision making capacity. The study findings imply that a person in a positive mood is likely to develop a positive attitude which consequently translates to the intention to perform a certain behavior. The study findings were indeed positive because they provide support for the theory of reasoned actions by established that the intention to use or not use condoms is not only