Fundamental principles of independent auditing
The Auditors’ Code, published by APB, prescribes nine fundamental principles
of independent auditing, as follows:
(a) Accountability
Auditors act in the interests of primary stakeholders, whilst having
regard to the wider public interest.
The identity of primary stakeholders is determined by reference to the
statute or agreement requiring an audit: in the case of companies, the
primary stakeholders are the general body of investors.
(b) Integrity
Auditors should act with integrity, discharging their responsibilities with
honesty, fairness and truthfulness. Integrity helps to insulate auditors
from matters of conflict of interests and elevate their objectivity.
Confidential information obtained in the course of the audit is disclosed
only when required in the public interest, or by operation of law.
(c) Objectivity and independence
Auditors should be seen to be objective in all their dealings with their
clients. They express opinions independent of the entity and its directors.
(d) Competence
This is the ability to carry out professional duty with great knowledge
and skills. Auditors should exhibit competence, derived from the
acquired qualifications, training and practical experience. Auditing
demands understanding of financial reporting and business issues,
together with expertise in accumulating and assessing the evidence
necessary to form an opinion.
(e) Rigour
Auditors approach their work with thoroughness and attitude of
professional scepticism. This was emphasised in the famous
pronouncement of Lord Dennins, which states that “an auditor is not a
blood hound, but should approach his job with professional scepticism
believing that someone, somewhere, has made a mistake and that a
check needs to be carried out to ensure that no such mistake was made
and this forms the whole essence of auditing.” Auditors assess critically
the information and explanations obtained in the course of their work
and such additional evidence as they consider necessary for the purpose
of their audits.
(f) Judgement
Auditors apply professional judgement, taking account of materiality
in the context of the matters on which they are reporting.
(g) Clear communication
Auditors’ reports contain clear expressions of opinion which are set out
in writing for proper understanding.
(h) Association
Auditors allow their reports to be included in documents containing other
information only if they consider that the additional information is not
in conflict with the matters covered by their reports and that they have
no cause to believe it to be misleading.
(i) Providing value
Auditors add to the reliability and quality of financial reporting. They
provide to directors and officers constructive observations arising from
the audit process, thereby contributing to the effective operation of the
business entity.
0 komentar:
Post a Comment