ACCY962 Accounting Reflection Essay Sample

ACCY962 Accounting Reflection Essay 

Use the knowledge you have accrued in this subject to write a reflective essay on the following topic:
What, in your opinion, is the role of a qualified auditor? Based on the knowledge you have gained in this subject, do you think that auditors play a useful role in financial markets? Explain your answer.

Students are to reflect on Wirecard or other reading done for your critical essay and prescribed learning materials as the basis in writing this reflective essay. Quality sources of references (at least 5 academic articles and/or newspaper articles) are required to support any argument on the important attributes of a qualified auditor.

Solution

Role of Qualified Auditor in Financial Markets:

An auditor is a person who is responsible for undertaking the audit process. He is the person, who examines the financial statements of a company and gives his opinion in the form of an audit report, stating whether the financial statements are free from material misstatements and gives a true and fair view. As per the MBA Assignment Expert, As per the rules, the responsibility to prepare financial statements lies in the hands of the management of the company, but the auditor uses his knowledge and applies auditing standards to review the accuracy of financial statements, and makes an audit plan. If an examination auditor is of the view that statements are misstated, different types of analytical and substantive procedures are done by the auditor to gather sufficient and appropriate audit evidence (Flees, et al., 2022).

In my personal view, a person will be said to be a qualified auditor when he has a qualification that is required by the country. For instance, in countries like India, a person having a certificate of Chartered Accountant will be said to be a qualified auditor, or in other countries, persons who have a qualification of ACCA, or CPA are said to be a qualified auditor. Hence, a qualified auditor is a person who is designated as a person who can act as an auditor. Also, there are different qualities that are possessed by an auditor. Some of these qualities are:

1. Coherent skills
2. Conversation skills
3. Expertise
4. Confidentiality
5. Perseverance

From the knowledge gathered, it can be said that an auditor is a person who should be independent, and act with honesty while forming an opinion. It is because these financial statements are used by different people such as investors, who rely on the opinion formed by the auditor, to take their financial and investing decisions. Along with this, the auditor should also be the one who is aware of his responsibilities and duties. For instance, I will not say to be a dedicated auditor, if I lack the skills to examine the books of accounts of a company, if documentation of audit conducted is not complete, or if I fail to disclose all the relevant and material information that is important from the perspective of an investor and other stakeholders (Lotfi, et al., 2022).

Hence, some of the responsibilities of an auditor are:

1. Examination of the accounting system of the company and its internal controls.
2. Preparing audit documents and minutes.
3. Examining whether financial statements are free from material misstatement.
4. Physical verification of assets and liabilities.

Along with this, I completely believe that auditors have an important role to play in the financial markets. As globalization is increasing, the financial markets are expanding as well and statutory auditors have an important role to play in this. They are responsible for maintaining market confidence in audited financial statements in the financial industry because banks are holding public funds, and the auditors need to ensure that the banks are financially stable. Hence, the regulating bank authorities like the central bank have a keen interest in the manner auditors are conducting the audit of these regulated companies. From the analysis, it can be said, that in my personal opinion, auditors are the people who instil trust between the people who needs capital, and investors who are ready to provide that capital (Jones, et al., 2021).

Also, the companies are under high pressure to perform well and achieve results which they want to strengthen the financial results and increase innovation, which restricts the scope of auditing, and audit becomes less relevant. But, I believe the same is not true, as the participants who are keen to achieve their short-term goals will not be able to substitute the same with the trust and integrity that financial audits can provide. Yes, in today's time, every financial institution is required to get its accounts audited as it will ensure the accuracy of their work and ensure that the funds are utilized for the activities or innovation for which they were gathered.

Recently, in an article, it was stated that a review was done by the public board to inspect audit reports of some companies. In this review, the inspector has chosen 219 audits, and it was analyzed that the opinion issued in 85 audits is not the one which should have been issued. But, it also did not ensure that the financial statements were materially misstated it meant that the audit reports that were issued in the first place should not have been issued. Hence, I realize that it is very important to increase the materiality and transparency in audits and this was done by ensuring that every company that is listed should form an audit committee. And the work of the audit committee is to review the work that is done by the board, and auditors to ensure that every party is independent and the opinions issued by auditors are unbiased (Edwards, et al., 2021).

The financial market is also becoming very uncertain, and after the financial crisis in 2007-08, it has become even more important to ensure that auditors are conducting the audits properly and that the financial aspects of the companies are checked. The crisis happened because the banks were issuing loans when they themselves were short of funds. Also, people are becoming smart and have started investing in financial markets to earn income. Their decisions are based on the opinion that is given by auditors and hence, auditors should ensure that the opinion is correct and is reflecting the true position of the company.
Hence, the international auditing and assurance standards also state that it is very important for auditors to make full disclosures about the facts and evidence that they have gathered during the course of the audit.

Reference:

Edwards, J. R., & West, B. (2021). The problematical nature of auditor independence: a historical perspective. Accounting History Review, 31(3), 255-285. https://www.tandfonline.com/doi/abs/10.1080/21552851.2022.2036621

Flees, R. B., & Mouselli, S. (2022). The impact of qualified audit opinion on stock returns: an empirical study at Amman stock exchange. Journal of Financial Reporting and Accounting. https://www.emerald.com/insight/content/doi/10.1108/JFRA-02-2021-0056/full/html

Jones, M., & Stanton, P. (2021). Negative accounting stereotype: Enron cartoons. Accounting History, 26(1), 35-60. https://journals.sagepub.com/doi/abs/10.1177/1032373220981424

Lotfi, F., Ramezani, A. A., & Naslmousavi, S. (2022). The Effect of Auditor’s Characteristics on the Future Stock Price Crash Risk. Iranian Journal of Accounting, Auditing and Finance, 6(2), 83-95. https://ijaaf.um.ac.ir/article_41840.html