These risks go beyond the risks inherent in the financial statements and include risks associated with using the work of other auditors
. Significant planning, communication, and professional judgment are required to ensure that proper steps are taken to reduce these risks while providing continued optimal client service.
The relationship between management accountants and auditors
continues to evolve, and recent changes in U.S.
The second section discusses three ways in which external auditors
typically rely on the internal audit function.
Through an experiment with practicing financial statement auditors
, a recent study found that auditors
will rely heavily on the testing of a competent IT auditor
when assessing control risk and planning substantive testing.
But SOX mandates have modified the relationship between external auditors
, firms, and firm managers.
The Institute of Chartered Accountants of England and Wales (ICAEW) comment letter calls for a "fundamental change in implementation approach," stating, "the crux of the issue is that management should not be remade in the image of the regulators and auditors
It is essential to note that auditor
independence should be as important to Department leaders as it is to the auditors
During an audit, everyone from top management to temporary employees must be prepared for a variety of questions from the auditor
. Typically, auditors
want to speak in depth with top management and those with direct authority over aspects identified in the program.
The new standards are expected to enhance the application of the long-standing audit risk model and improve the quality of audits because they specifically require auditors
The new rules promoting the ethics and independence of public company auditors
"draw clear lines to distinguish inappropriate services that impair auditor
independence from permissible services that are not detrimental" according to PCAOB Chair William J.
The legislation, signed by President Bush on July 30, 2002, applies to all publicly held companies, their audit firms, and all actively working auditors
. The changes in U.S.
To that end, the AICPA has commented on numerous SEC proposals focused on internal control reporting, audit committees, codes of ethics, misleading auditors
, off-balance-sheet activities, non-GAAP proforma financial disclosures and auditor
independence--seven key areas of the law in which the CPA profession has long-held and strongly advocated positions to protect the public and add valuable information to the capital markets and investors.