Week 4 Case Study – Article Example
CASE STUDY Responsibilities of auditors in case of fraud Auditors are man d with the responsibility of verifying the books of account and provide their independent as to whether they give a true reflection of financial reports of an organization. In order to operate smoothly, they usually raise matters involving managing an organization. They often assess the measures that have been put in place by the organization to control the internal systems of the body. In addition, they often scrutinize the financial reports to spot errors and omissions that have been committed while preparing the financial reports. They also evaluate inventory management systems that are being used within the organization. In case the existing inventory management is inefficient, they usually recommend the best inventory systems that can be which promote efficiency in the management of inventory. Inefficient inventory management systems often increase the lead-time when an order is hence may cause breakdown in the production processes. It is prudent for auditors to report fraudulent transactions to the top management immediately they unearth suspicious transactions (Krishnan & Visvanathan, 2007).
Independence in corporate governance
The independence of corporate governance is imperative for a number of reasons. Auditors are supposed to carry out their duties independently without portraying any form of favoritism and biases. Both internal and external auditors should exercise Independency. In the case of Adelphia, Deloitte & Touche, which is reputable audit firm, failed to demonstrate that it is an independent body by colluding to defraud the company. Auditors are usually faced with the challenge of being bribed so that they can doctor the books of account. An independent corporate means that audit firms can be able to demonstrate the highest level of integrity by giving honest reports without being coerced. Auditors are supposed to safeguard the interest of shareholders rather than being partisan (ACCA, 2011).
ACCA, (2011).Independence as a concept in corporate governance.
Krishnan, G. V., & Visvanathan, G. (2007). Reporting Internal Control Deficiencies in the Post‐Sarbanes‐Oxley Era: The Role of Auditors and Corporate Governance. International Journal of Auditing, 11(2), 73-90.