The Biggest Problem Facing the Auditing Profession
The auditing profession is one of those professions that are constantly at risk
Auditing is essential in economy, because it provides confidence to investors as well as maintains discipline and standardization to corporate accounting. Therefore, auditing serve to increase economic potential and liquidity of capital markets.
The auditing profession is at odds, because investors and creditors think that auditors should discover and ferret out fraud, while auditors continue to try to circumscribe their responsibilities. The biggest tension lies with management and its auditors. Every company needs to hire auditors, because the management does not know this profession and its functions. The auditors try to meet the needs and demands of their profession, while at the same time make a profit to the company or corporation (Ketz, 2003). According to this, auditors have a mistaken belief that that their client is management instead of shareholders.
According to research, the accounting profession may be viewed by experts as a patronage system. It means that large corporations cannot do auditing without accountants, but they influence significantly on their work. Conflicts of interests are a frequent problem in the audit profession. Oftentimes, auditors have to be beholden to the organization’s senior management instead of feel free to make independent appointment between auditors and shareholders of the company. Furthermore, the conflicts of interest are usually arisen because of interwoven functions of audit and consultancy. Friendly relationships that have been built between companies and their auditors during a certain period of time, can compromise independent judgment and cloud the auditing function. Thus, looking for a proper decision, many experts claim that it would be helpful to create a division between auditing and consultancy (Rani & Mishra, 2009).
Communication between parties in the auditing profession is the life-blood of every organization. Effective communication is essential to the auditing organizations, to the auditing personnel and to the auditing process itself. Effective communication is important to deal successfully inside and outside the organization. It is important, therefore, to know the main principles, techniques, and methods of communication as applied to the process of auditing. Communication will involve thinking, analyzing, gathering and consolidating facts for effective communication during the audit (Ketz, 2003). The research asserts that the biggest problem with the auditing profession deals with audit efficiency and quality. This profession must be standards based, not rules based. Auditors must follow the rules of standardization, and not the rules of the company they are working in. Unless this problem should not be taken into consideration by the company`s management, auditing will possess a lot of problems. Audit firms treat the audit like a “loss leader”. Audit firms have to reward audit staff for the qualities they perform, and not for selling. It is a well-known fact that the auditing staff must be constantly trained because of the changes that occur in this profession. Thus, auditors must have a very high level of technical competence.
It should be concluding, therefore, that the biggest problem of the auditing profession is the lack of independence and integrity. Most companies do not let auditors to perform their professional activities according to the auditing standardization. In fact, auditors are abounded to perform their tasks according to the organization’s senior management. A great number of auditors suffer because of that. As mentioned above, the management of the organizations must know the main principles, techniques, and methods of communication as applied to the process of auditing. To improve this situation, it would be helpful to discuss the question of the auditor’s monitoring activities within an organization.