INTERNATIONAL COMPARATIVE AUDITING ISSUES ASSIGNMENT HELP

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INTERNATIONAL COMPARATIVE AUDITING ISSUES

The following are the key features of the international audit process:

    1. Performing the audit procedures that have been planned
    2. Performing and concluding the analytical procedures
    3. Evaluating the sufficiency of the audit evidence
    4. Evaluating the impact of the misstatements that have been identified during the process of audit.

The stakeholders in an audit are the company that is being audited and the public or the investors who have invested in the company.

The main purpose of an internal audit is to assess and ascertain whether the business practices are helping the business in the management of the risks and in the meeting of its organizational goals.

Whereas the main purpose of an external audit is to express an opinion as to whether the financial statements represent the true and fair view of the financial position of the business.

(Lewis, 2013)

The Public Company Accounting Oversight Board, also known as the PCAOB, is a private sector not-for-profit organization that was created by the Sarbanes Oxley Act, 2002, in order to oversee the accounting professionals who provide independent audit reports for the companies that are traded publicly. The responsibilities of PCAOB include the following

    1. Registering the accounting firms that trade publicly
    2. Establish the auditing, control on quality, ethics, independence and the other standards that are related to the public company audits.
    3. Conducting the inspections, investigations, and disciplinary proceedings of the accounting firms that are registered.
    4. Enforcing the companies to comply with the requirements of the Sarbanes Oxley Act of 2002.
    5. Setting of the Auditing standards for all the companies that registered in the United States.

(Sec.gov, 2014)

The PCAOB is working with the Australian Investment Commission to enhance its cooperation in the supervisory oversight of auditors and public accounting firms practising in the 2 regulators’ respective jurisdictions.

PCAOB strongly believes that all oversight bodies must closely monitor each regulator’s ability to meet the challenges of increasingly global markets.

The Statement of the Protocol would allow the PCAOB and ASIC to work together to oversee public accounting firms and auditors in the United States and Australia. It would serve as a successful example of cross-border cooperation between the PCAOB and other parts of the world.

The following are the issues that are faced by the multinational auditing issues that would be faced by audit firms seeking to audit the operations of multinational companies:

  1. Difference in the frameworks of accounting: this includes the following questions:
  2. Whether the group is using the local accounting principles or not?
  3. Does the reporting of the group require any adjustment for the differences?
  • Whether those adjustments are correct or not?
  1. Different auditing standards:
    1. Is the auditor of the overseas subsidiary the same firm, and do they use the same audit guide?
    2. Is the auditor from a different firm?
  • Is the current auditor comfortable working with the auditor from a different firm that uses the same audit methodology?
  1. Cultural issues and the barriers due to language:
  2. Can the same level of scepticism be expected?
  3. Does the culture of the person pose any problem?
  • Is there a risk of a miscommunication?
  1. The auditors are responding through the following:
  2. By focusing on the risks:
  3. By focusing on the subsidiaries that contribute materially to the group?
  4. By focussing on the change in the methods of accounting and on the new accounting issues?
  • By focusing on the entity as a whole?
  1. Professional scepticism:
  2. By obtaining the evidences from the explanations form the management
  3. By challenging the assumptions of the management
  • By using the advice from the experts and the specialists
  1. Exercising the control over the quality:
  2. By reviewing the working papers and the appointment of the quality review partner for the engagements that are risky
  3. By rotating the current audit partner so that fresh eyes can be brought to the audit
  • Communicating with all the auditing teams
  1. By aligning themselves with the International Standards in:
  2. Accounting (IASB)
  3. Ethics (IFAC)
  • Auditing (IAS’s)

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