Auditor Ethical Standards and Auditing Strategies

Auditor Ethical Standards and Auditing Strategies Discuss the ethical standards required of auditors. The Auditing Practices Board (APB) has issued new standards governing the ethical conduct of auditors which commenced on 15 December, 2004 (Cosserat, 2004). The following lists the new Ethical Standards: Integrity, Objectivity and independence These new ethical standards also include the fact that client’s must also facilitate policies new standards is that auditors of a control environment appoint an ethics partner. This position entails the review of the firm’s procedures and policies which regard to compliance and as such it provides the associated guidance for partners. The new Standards recognize that for smaller audit firms it might not be practical for an ethics partner to be designated. The new Ethical Standards are a result of a number of international developments represented by either international organizations and or countries that have helped to bring about the changes to Standards. These are represented by the following: The United States legislation termed the Sarbanes-Oxley Act which lays down the independence requirements for auditors. In particular it addresses audit firms that audit SEC registrants or participant in significant parts of the foregoing. A report that is titled ‘Rebuilding Public Confidence in Financial Reporting’, which is an international perspective that was developed as a result of the commissioning by the IFAC of an independent group to address the preceding, and As a result of the publishing of the ‘Principles of Auditor Independence’ which was put forth by the International Organization of Securities Commissions. The new Standards are what are termed ‘principles-based’ as opposed to ‘rules-based’. The preceding means that there are clear requirements as well as prohibitions. The key underpinning of this change provides for stricter compliance with the ‘spirit of intention’ and thus prevent the possibility of either a firm or person attempting to evade or avoid conformity with the rule. The effect of the foregoing helps to ensure compliance with ethical standards in that ‘intention’ covers a broader ethical parameter. In effect, one could avoid or evade breaking a rule, however the intent through either actions or the change in former action(s) could point to the definitive attempt to do so. This broader interpretation widens the scope of ethics and requires auditors to conduct their actions accordingly throughout the process. In a speech delivered by Douglas Carmichael at the AICPA National Conference on 12 December, 2003 (Carmichael, 2003) he sets forth the examples of ‘alleged’ audit failures of National Student Marketing in 1969, Penn Central in 1970 and Equity Funding in 1973 as instances whereby principle based auditing might have forestalled the problems. The foregoing is true of Enron’s collapse in 2001 and indicates that the broader scope or ethics afforded auditors under the principle based methodology provides better rules and guidance from which auditors can act. Financial, business, employment and personal relationships This segment of the new Standards addressed the varied relationships that can and do exist between clients and audit firms and their staff. This limits the nature of relationships and threats to the objectivity and independence of audits and prohibits those which the APB believes that no effective safeguards can be introduced. Long association with the audit engagement Associations of long duration poses potential threats, in particular with regard to those represented by publicly listed companies. Thus, the new Standards set forth the rotation of audit firm partners to introduce objectivity as well as independence. The new Standards sets that term as five (5) years as the continuous period limit as well as a break period of five (5) years for the rotation. Fees, economic dependence, remuneration and evaluation policies, litigation, gifts and hospitality. One important, and highly debated point is the requirement that no single client shall account for more than ten percent (10%) of an audit company’s annual fee. This figure is fifteen percent (15%) for non-publicly listed firms. Non-audit services provided to audit clients This segment of the new Standards identifies the general approach to non-audit services and applies general principles to various specific non-audit aspects such as: Internal audit services Accounting services Information technology services Valuation services Recruitment and remuneration services Corporate services, and Tax services Explain what is meant by the term Risk Based Auditing  and the advantages that accrue to the auditor in  utilizing a risk based Risk based auditing entails the providing of â€Å"†¦ independent assurances on the management of risks, and forming an opinion †¦ which sound controls have been implemented †¦ maintained to mitigate those significant risks †¦. Management has agreed upon† (Association of Chartered Accountants, 2002). Risk based auditing addressed some important aspects and questions which controls-based auditing does not answer. The benefit of risk based auditing is that it provides a basis for the auditor to have an examination of the business process and its risks. The foregoing provides a context for the results. Risk based auditing changes the manner in which internal auditors think as well as converse regarding control and risk. The auditor anticipates change and examines the manner in which management deals or is dealing with risks (McNamee et al, 1999) An advantage of risk based auditing is that the auditor is typically looking at control activities that were designed at some previous point to deal with aspects which may have long since been forgotten. In other words the internal auditor might be examining activities which might or might not be relevant in terms of current risks. Said controls could actually be extraneous as a result of monitoring aspects which are either no longer important or in existence. Another aspect is that essential controls could very possibly be overlooked as in a sense they do not exist yet due to changes in the business process. A good number of internal auditors have implemented the utilization of control self-assessment (CSA) as a means to address some of the concerns of management in capturing the state of the business process with regard to risk and control. It is important to note that control models both limit and define CSA so as a result these applications usually start with controls to the right and to the left of the internal audit. The limit of CSA is in its ability to explore the future. Risked based auditing has internal auditors anticipating change. As opposed to the old approach of focusing upon history, the reports generated by auditors address the present as well as the company’s preparedness level with respect to dealing with the future. The advantage is that internal audits complete the circle with respect to assurance of control regarding present operation plans and provide input to risk assessment with regard to the strategic plan. As a result, management places a higher degree of value on risk based internal audits than those of the traditional controls based type. The failure of the United States based Enron during 2001 has been a major factor adding to the impetus for improved financial reporting and auditing /Crossert, 200). The essential elements of today’s financial reporting systems are business viability along with profitability assessments (Bell et al, 1997). The foregoing is accomplished by key audit steps, auditing procedures concern ing strategy analysis, key indicators that are required as well as necessary to effectively monitor performance and risk assessment. Enron’s collapse has brought about standards that strengthen the responsibility of auditors in detecting fraud. The preceding requires evaluation of the effectiveness of an entities first management in preventing such misstatements as a result of fraud or other means. It also calls more attention to irregularities of a minor nature and thus appreciate their significance as the multiplicity of such small irregularities can be significant. Describe three (separate) codes of legislation under which statutory auditors may be required to make a report to the regulator in the event of non-compliance on the part of  a client with the law and provide examples where an auditor would be required to issue a report The Criminal Justice Act (Irish Statute Book, 20053) under Section 59 â€Å"Reporting of Offences† sets forth legislation whereby auditors may be required to issue a report to the regulator as a result of non-compliance by a client with statutes of the law. It describes under â€Å"relevant person† (Irish Statute Book, 20053) â€Å"(a) who audits the accounts of a firm†¦Ã¢â‚¬  Under the Act, an auditor is required to issue a report for the following: â€Å"(2) Where the accounts of a firm, or as the case may be any information or document mentioned in subsection (1)(b), indicate that – an offence under this Act (other than sections 8, 12 to 15, 49(1) and 52(8) may have been committed by the firm concerned, or such an offense may have been committed in relation to its affairs by a partner in the firm or, in the case of a corporate or unincorporated body, by a director, manager, secretary or other employee thereof, or by the self-employed individual concerned, the relevant person (which in this instance includes the auditor as described above), shall, notwithstanding any professional obligations of privilege or confidentiality, report that fact to a member of the Garda Siochana.† The instances referred to by the preceding are described as â€Å" (2) For the purposes of this Act a person deceives if he or she –â€Å" are as follows (Irish Statute Book, 20053): â€Å" 1. (a) creates or reinforces a false impression, including a false impression as to law, value or intention or other state of mind, (b) prevents another person from acquiring information which would affect that person’s judgment of a transaction, or (c) fails to correct a false impressions which the deceiver previously created or reinforced or which the deceiver knows to be influencing another to whom he or she stands in a fiduciary or confidential relationship â€Å" An example of the preceding shall be addressed under section (a). This refers to an instance whereby either contracts, or real property value of a corporations assets are miss-stated. Such can be accomplished through the utilization of a qualified or recognized third party or in collusion whereby said third party conducting said valuation is unaware of the addition of material miss-statements that inflate the value or price under said instances. A contract, for example, could be altered as to the agreed upon terms, payment, and thus said inflated price affects the outcome of an audit whereby the firm’s value of income is thereby heightened. The same type of back office procedure could also relate to an appraisal of real property such as plant, real estate or equipment whereby either its price, terms of sale or existence has been altered. These types of misconduct are the sustentative underpinnings. The foregoing broad examples represent the activities which resulted in the United States affecting such companies as WorldCom and Global Crossing. The miss-statement of various financial reporting areas caused the valuations of these companies to be inflated thus increasing the stock price before subsequent investigations uncovered the miss-statement errors. The bankruptcy proceedings and drop in stock price affected millions of shareholders and caused significant financial loss. Bibliography Association of Chartered Accountants. 2002. Definition of Risk Based Auditing. http://www.accaglobal.com/technical/responses/archive/650602 Bell, , T., Mars, F., Solomon, I. Thomas, H. 1997. Auditing Organizations Through a Strategic Systems Lens: The KPMG Business Measurement Process. KPMG Peat Marwick LLP, Illinois, Carmichael, Douglas. 2003. Professionalism is Primary. Speech delivered before AICPA National Conference 12, December, 2003, Washington D.C. Cosserat, Graham. 2000. Modern Auditing. John Wiley Sons. ISBN: 0470863226 Irish Statute Book. 2003. Criminal Justice (Theft and Fraud Offenses) Act. www.irishstatutebook.ie McNamee, David, Selim, Georges. 1999. The next step in risk management – risk-based auditing. Internal Auditor, published by The Institute of Internal Auditors, Altamonte Springs, Florida, The United States

Super Leadership and Creativity Potential :: Business, Super Leadership Approach

Research Objectives The body of the literature on management and leadership primarily concentrate on the vibrant nature of the common organization. This paper augments the abundantly available literature on leadership studies for organizations. The minor intentions of this paper is to generate an forward motion that will induce other academics and scholars to focus on the topic of leadership at a much wider level having more comprehensive objectives in mind. The main focus would be to explore the link between super leadership behavior and creative potential through idea generation for an innovative and creative culture within organization. Research Questions The research questions in this case are presented as follows: 1. What is the relationship between super leadership and creativity potential? 2. How super leadership provoke an employee to perform at its best level? REVIEW OF LITERATURE Why to shift from traditional leadership to Super-Leadership? Super-leadership, sometimes also called as â€Å"Self-Leadership†, may be defined as the strategy to lead others is hidden in by leading oneself (Manz & Sims, 2001). The main difference between traditional leadership management concept and Super-Leadership is the main focus on followers rather than leader itself, and especially the belief of improving follower’s capacity to lead who are effective self-leaders. Therefore, concisely, super-leadership is the way of leading others to lead themselves. As argued (Sims & Manz, 1996), for super leadership behavior to be implemented, a leader has to adopt 10 most significant shifts from traditional approach of leadership in order to move towards super leadership approach are as follows:- 1. The leader helps out the team members/group to switch from external observation to self-observation. 2. The focus is on moving from designated goals to goals that are self developed. 3. Organic control is exercised by team/group members’ i.e. external reinforcement for task performance changes in to internal reinforcement with an addition of external reinforcement for self-leadership behaviors. 4. Leadership prefer to motivation techniques not only based on external compensation but also based on the natural rewards associated with work. 5. The leader shifts the group to focus on self criticism rather than external criticism from the organization, which often creates bad impact upon team/group members. 6. There is a move from external problem solving towards self-problem solving techniques. 7. There is a shift from external job assignments to self-job assignments. 8. Leadership moves from external planning to self planning and from external task design to self-design of tasks at step eight. 9. Any problem or issue arises should be treated as an opportunity instead of threat by the group/team members.

Impact of Baby Boomers on Today’s Workforce

Baby boomers are those born between 1945 to 1964, the boom of the US population. Data from the Department of Labor BLS, in 1998 indicate that there were 77 million baby boomers and this represented 37% of the country’s population. As of 2008, baby boomers make up 40% of US workforce. This percentage is expected to increase dramatically in the next decade and baby boomers will make up majority of the employees in many companies. (Department of Labor, 2008) Companies are now at a dilemma on the effects of this population boom of older workers. Human Resource Departments are torn between decisions to retain or terminate their services. At one hand, older workers have the experiences and technical expertise; many are valued employees. Retiring or terminating them may mean significant loss to many companies. On the other hand, many older employees have not kept pace with modern technologies; their skills have become obsolete. Older employees also are more expensive considering higher salary rates, pension and other benefits. An article from ABC by John Strossel and Frank Mastropolo, â€Å"Fired for Being Too Old: Unfair or Good for Business? † (2008) presented various age discrimination cases filed against companies. Like many, disc jockeys of 99. 7 KY Max Floyd and Tanna Guthrie were fired from work and without any warning. Though they were told that the company was changing formats, they knew that they were fired for being too old and they felt hurt and betrayed. Why couldn't they keep us? We've been there, been loyal with the company, and they didn't change the music a lot† (Strossel & Mastropolo, 2008, p. 1). They sought protection of the law for age discrimination and filed million-dollar lawsuit against the company. Sympathy may be given to baby boomers that end up being replaced with young, fresh talents. But in the competitive industry, businesses have to survive and be able to replac e their aging employees when needed.

How to Write a Limerick

You might need to write a limerick for an assignment, or you may want to learn the art just for fun or to impress a friend. Limericks are fun  Ã¢â‚¬â€Ã‚  they usually have a bit of a twist and a perhaps a silly element. And best of all, they can be a great way to express how clever and creative you can be! The Elements of a Limerick A limerick contains five lines. In this mini-poem, the first, second, and fifth lines rhyme, and the third and fourth lines rhyme. Here is an example: There once was a student named Dwight,Who slept only three hours a night.He dozed in the classroomAnd snoozed in the bathroom,So Dwight’s college options are slight. There is also a certain rhythm to a limerick that makes it unique. The meter, or the number of beats (stressed syllables) per lines, is 3,3,2,2,3. For example, in the second line, the three stressed points are slept, three, and night. The syllabification is (usually) 8,8,5,5,8, but there is some variation in this. In the limerick above, there are actually 6 syllables in the third and fourth lines. How to Write Your Own Limerick To write your own limerick, begin with a person and/or a place. Make sure that one or both of them are easy to rhyme. For your first try, start with â€Å"there once was† and finish the first line with five more syllables. Example: There once was a boy from Cancun. Now think of a feature or an event and write a line that ends in a word that rhymes with Cancun, such as: Whose eyes were as round as the moon. Next, skip to the fifth line, which will be the final line that includes the twist or punch line. What are some of your rhyming word choices? There are many. BalloonRaccoonSpoonmaroon Try to think up something funny or clever to say and write a line that will end with one of your rhyming words. (You will find that the two short lines in the middle are easy to come up with. You can work on those last.) Here is one possible result: There once was a boy from Cancun,Whose eyes were as round as the moon.That wasn’t so bad,But the nose that he hadWas as long and as flat as a spoon. Have fun!