Audit Quality Essay Example | Topics and Well Written Essays - 2500 words

Audit Quality - Essay Example The auditors are looked upon by the readers of the financial statements to give assurance that the data presented are free from MATERIAL errors or irregularities. The readers of the financial statements need the financial statements in order to help them in their decision making. At present, auditors are held liable for fault due to negligence or incompetence doing audit work. Also together with regulation and reputation liability acts as a discipline on audit quality in a context where shareholders and other third parties rely on financial information that is audited and paid for by the company audit( Dipiazza, 2000) client. A good example is the Enron case. The audit staff of Arthur Andersen was charged for being negligent in performance of the audit function. Arthur Andersen has now been relegated to the side walk while the remaining big four have remained walking in the major highways handling the major and juice clients of the entire United States and overseas. ISA 240 Fraud and Error. This auditing standard explains the procedures in the audit of Fraud (Zea, 2002) and Error. This audit standard also tells the penalties, especially criminal offenses like being jailed, for gross negligence in auditing the clients' financial statements. Fraud is defined as intentional misstatement either by the company employee (who steals money or property and conceals the errors) or the management itself. The management sometimes does this fraud in order to present a better picture of what the company is in reality. This is what we call, in the accounting parlance, as window dressing. ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements This auditing standard specifically instructs the auditors to determine if any laws have been violated by the false information presented in the financial statements. One such law of the land is the Income Tax Law, The Property Law, and the Contract law. ISA 220 Quality Control for Audit Engagements. Quality control of engagements means that each engagement must be done with real professionalism. Professionalism means that all auditing standards and auditing procedures must be followed whenever practical or possible. There must be a constant evaluation of audit performance ob all audit team member so that recommendations and corrections can be implemented so that the next engagement will be better and faster than the prior one. Quality audit means that all audit procedures are made to ensure gathering all relevant and material data as soon as possible. IAPS 1010 The Consideation of Environmental Matters in the Audit of FinancialStatements. One audit procedure in environmental audit is to see to it that no environmental laws have been vi