The definition of statutory audits is checking accounts required by law. Companies are given a directive to audit their accounts according to the law. These audits are conducted in a manner in which the report of the auditor is presented. They are conducted to meet the requirements of the government agency. The scope of these audit programs are set by the government body. The auditors report must conform to standards required by the governing agency. The financial statements and the financial data generated from theses audits do not conform to GAAP.
Caramanis et al (2008, p.132) the auditors are elected by shareholders and they hold a position in the Board of directors. The qualifications of a statutory auditor are prescribed by the company’s Act. A person must be a practicing chartered accountant to be appointed as a statutory auditor. The main object of the statutory audit is to form an opinion on the financial statement of the organization. The auditor has to state that whether or not the financial statements are showing the true and fair view of the affairs of the organization. The remuneration of a statutory auditor is fixed by the appointing authority.
The statutory auditor presents his report to the shareholders. Forensic accounting Forensic accounting according to APES 215 standards requires that members should provide quality and ethical forensic accounting services. APES 215 requires that the members of Australia to follow the mandatory requirements of the standard when providing forensic accounting services. Members outside of Australia are required to follow the mandatory requirements of the APES 215 to extend to which they are not prevented from doing so by their specified requirements of local laws and regulations.
All members are required to comply with the regulations provided by the code (Crumbley et al 2005). The fundamental responsibilities of members should comply with the relevant law. A member should observe and comply with the member’s public interest obligations when providing forensic accounting services. Auditors in forensic accounting are required to exercise independence in their work as defined in the standard. According to Pagano et al (2005) Auditors shall determine the circumstances of the forensic accounting have assurance engagement under the requirements of auditing and assurance standards board.
Auditors are required to provide expert witness free from relationship with third parties and in accordance to the expert witness service. The witness should disclose matters in the auditor’s report that can be used by the court as an evidence of the auditor’s independence. Auditor’s are required to practice professional competence and due care where training and study or experience is necessary. Auditors should not rely on evidence from third parties and if so, produce any report issued by the party concerning the entries.
The auditor’s report on financial statements must be confidential and reliable to the public. The standards GN2 and APS11 The initiative for these guidelines aims to assist auditors to maintain high professional standards when acting as forensic auditors. They should promote a better understanding of the value of forensic accounting services to those who use or rely upon the work of expert auditors. These guidelines are tailored to the people working to provide forensic services to ensure that they benefit and demonstrate to the users of the services a commitment to quality (Crumbley et al 2005).
Professional independence When providing forensic accounting services experts are required to be independent when giving these services like any other professional practice. Here any person offering a forensic accounting service should not take any influence of information from third party that may lead to conflict of interest in his work. In such a situation the third party may give advice the auditor but the information should not lead the expert not to make his independent conclusions on the audit. The reports provided by the auditor should be objective enough and reliable. Skill and Competence
Crumbley et al (2005) denotes that in performing forensic accounting services, the experts are advised to exercise the necessary skills and competence when performing their professional work. Auditors should take the responsibility to evaluate their skills and ability of performing the job given on forensic accounting services. They should exercise professional judgement in terms of training, knowledge, experience and expertise when determining their qualification to offer auditing services. Reasonable Care Under the standards, auditors are required to take reasonable professional care when providing their forensic accounting services.
Pagano et al (2005) argued that the auditor is required to review every level of supervision of the work done and the judgement exercised by those assisting in the audit. The auditor may require professional advice and should ensure that the client is clear on the terms of engagement. Confidentiality The standards provide that any information received by the expert in provision of forensic accounting services, should not be used for other purpose than the proper performance of the professional duties (Heaston 1990, p. 63).
Auditors are required to keep any information given to them confidential and use it for the purpose of auditing only. This demonstrates that the information should be kept secretly unless there is a legal duty to disclose the information. The auditor should not disclose any information about the business without its consent. Professional Behaviour According to Pagano et al (2005) the auditor should act professionally where there is no clear information concerning forensic accounting services. He should address professionally the issues arising from the argument in case of any misleading information.
An auditor should not be biased in addressing issues of misinformation and should inform the client after receiving such information that interferes with their opinion. Remuneration Professional providing forensic accounting services is remunerated on professional fees on the basis of the services offered. The professional fees do not relate to the outcome of the matter or amount of damages awarded (Heaston 1990, p. 66). Conclusion In conclusion, statutory audits differ from the forensic accounting investigation in the sense that companies audit their records according to the directions given by the law.
Statutory audits are conducted o meet the requirements of the government agency. The financial statements and the financial data generated from theses audits do not conform to GAAP. The qualifications of a statutory auditor are prescribed by the company’s Act. The main object of the statutory audit is to form an opinion on the financial statement of the organization. The remuneration of a statutory auditor is fixed by the appointing authority. The statutory auditor presents his report to the shareholders. In forensic accounting, auditors are taken as experts who should operate to the prescribed codes of standards.
Their independence is not likely to be interfered by third parties. They are expected to behave professionally when making decision. Their remuneration is determined by the form of the services offered. Bibliography Antle, R & Nalebuff, B 1991, ‘Conservatism and auditor-client negotiations,’ Journal of Accounting Research, pp. 31-54. Aranya, N & Sarell, M 1975, ‘the auditor-firm conflict of interests: A comment,’ The Accounting Review, pp. 854-856. Arrington, CE, Bailey, CD & Hopwood, WS1985, ‘An attribution analysis of responsibility assessment for audit performance,’ Journal of Accounting Research, Spring, pp.
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