Controversies Behind Accounting and Audit Profession Essay

Controversies Behind Accounting and Audit Profession - Essay ExampleTo prevent story fraud, mevery literature states that it is common for the body of institutional investors to act as the companys monitors. (Chen, Harford, & Li, 2007 Chung, Firth, & Kim, 2002) Therefore, it is possible that fraud firms have a low level of institutional enthronisation before committing fraud due to the fact that these companies lack effective accounting monitoring.For this study, the detective will compare and contrast the managements responsibility for an entitys pecuniary statements with the auditors responsibility for find fraud and error follow by evaluating the most recent suggestions made by the Audit profession in respect with the auditors responsibility in sight fraud. The researcher will also discuss about the audit expectation gap as well as the factors that contributes to the increase of the audit expectation gap. The researcher will also examine whether the audit expectation gap is similar to the accounting expectation gap. Prior to the main discussion, the researcher will provide some strategic ways on how auditors could reduce the gap on audit expectations.Compare and Contrast Managements Responsibility for an Entitys Financial Statements with the Auditors Responsibility for Detecting Fraud and misapprehensionUsing the generally accepted accounting principles in UK, the top management behind a company is responsible for the preparation of financial statement base on the highest integrity, objectivity and clarity. (Price, 2002) As part of the managements responsibility in developing an accurate financial statement, the top management should ensure that the company takes and trains qualified employees to break away behind the establishment and communication of the companys accounting policies and procedures. Since businesses are more concerned with the companys profitability, there is a higher chance for top management to manipulate the companys financial statement. In order to lessen the incidence of accounting fraud and misrepresentation of the accounting figures, there is a strong need for each company to hire the service of an external auditor to perform the auditing of the companys financial statements.The main responsibility of the auditors is to ensure that each company submits an accurate financial statement1 by detecting any possible accounting fraud or errors based on the current United landed estate Law and Accounting Standards known as the United Kingdom Generally Accepted Accounting Practice. (Ernst and Young LLP, 2007) In relation to determining whether the company practices accounting procedures, auditors are responsible to follow the relevant legal