Essays on Elevating Professional Judgment in Accounting and Auditing Assignment

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The paper "Elevating Professional Judgment in Accounting and Auditing" is a perfect example of a finance and accounting assignment. There is a definite level of gap between the auditor’ s actual performance and Kim’ s immediate expectations. It is important to understand that any given audit provides a significant level of reasonable assurance as not absolute assurance is guaranteed (Page, N.d). The fundamental task of an auditor is to ensure that aspects of both reliability and credibility are assured but will not assure the fairness of disclosed financial statements (Goldwasser, 2006).

Also, the auditor is not positioned fairly to ascertain whether or not a company will fail or succeed due to the nature of financial reporting, which is focused on conducting judgments in regards to accounting estimates as well as the choice and application of numerous accounting methods. Most notably, there is no single solution for a company’ s level of profits and thus, auditors are placed in a position to guarantee that the disclosed company profits are certain (Goldwasser, 2006). However, auditors will assure of the appropriateness of the selected accounting methods, accounting estimates as well as their immediate application.

Another fundamental reason for why there fails to be absolute fairness rests with the immediate nature of the audit process. This is because auditors will not be able to analyze each and every transaction conducted or the certainty of account balance and so, they embark on sampling, which increases the chances of some items not being selected for testing purposes (Goldwasser, 2006). Significantly, some of the transactions as well as account balances are challenging in regards to gathering reliable evidence hence there is a higher possibility of concealing evidence given that auditors are limited with time resources. Question 1(b) Dear Kim, Kindly, understand that auditors are required to uphold professional skepticism at all times.

This is a concept under which they are required to exercise independence in regards to both its staff and clients (Glover and Prawitt, 2013). It allows them to question all evidence presented to them by clients. It does not necessarily mean that client’ s information might be deceiving but it allows them to measure its validity (Glover and Prawitt, 2013).

References

Bazerman, M.H., and Moore. D. (2009). Judgment in managerial decision making, 7th ed. Hoboken, NJ: John Wiley & Sons.

Brazel, J., Carpenter T., and Jenkins, G. (2010). “Auditors’ use of brainstorming in the consideration of fraud: Reports from the field.” The Accounting Review, 85(4), 1273–1301.

Goldwasser, L., D. (2006). The past and future of reasonable assurance. CPA Journal. Retrieved from http://www.nysscpa.org/cpajournal/2005/1105/special_issue/essentials/p28.htm

Glover, S, M and Prawitt, D, F. (2013). Enhancing auditor professional skepticism. Retrieved from http://www.thecaq.org/docs/research/skepticismreport.pdf

Glover, S.M., D.F. Prawitt, and KPMG, (2011), Elevating Professional judgment in accounting and auditing: The KPMG professional judgment framework

ICAEW. (2014). The provision of non-audit services to audit clients. Retrieved from http://www.icaew.com/en/technical/ethics/auditor-independence/provision-of-non-audit-services-to-audit-clients

Nelson, M.W. (2009). “A model and literature review of professional skepticism in auditing.” Auditing: A Journal of Practice & Theory 28(2), 1–34

Page, M. (N.d). What do auditors in the UK mean by reasonable assurance? Retrieved from https://www.icaew.com/~/media/Files/Technical/Audit-and-assurance/audit-quality/audit-quality-forum/what-do-auditors-in-the-uk-mean-by-reasonable-assurance.pdf

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