Saturday, June 15, 2019

Case study on the overall audit process Example | Topics and Well Written Essays - 1250 words

On the overall audit process - Case Study exampleThey did not aid the embezzlers, did not k instantaneously about the embezzlement, and did not perform recklessly. But they failed to comply adequately with GAAS and thus failed their role as auditors. Not well-educated about the embezzlement was the problem It is the role of an auditor to discover embezzlement, financial impropriety and dishonesty.The definition of duty of care has changed over the centuries of auditing tradition. In 1896, Justice Lopes define the duty of care thusly It is the duty of an auditor to bring to bear on the work he has to perform that skill, care and caution which a jolly careful, cautious auditor would use...An auditor is not bound to be a detective, or, as was said to approach his work with suspicion, or with a forgone conclusion that on that point is something wrong. He is a watchdog, not a bloodhound. He is justified in believing tried servants of the company in whom confidence is placed by the comp any. He is entitled to assume that they are honest and rely upon their representations, provided he takes reasonable care (Morgan, 2000). Under this standard, Mitchell & Moss did no wrong.But this standard is no longer sufficient, especially as the complexity of financial transactions mount. In 1958, Lord Denning established a new norm To perform his task properly he must come to it with an enquiring mind - not suspicious of dishonesty - but suspecting that someone may have made a mistake somewhere and that a fracture must be made to ensure that there has been none. Finally, in 1997, UK Law changed to require a suspicious attitude. US law is the same now Mitchell & Moss acted as watchdogs, not bloodhounds, and thus were deficient and negligent.The United States GAAS is now divided into ten standards split into three categories. Mitchell & Moss clearly were adequately trained and proficient, independent and utilise professional care (AICPA). But where Mitchell and Moss failed is

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