AC410 Auditing Unit 2 Assignment And Rubric Ethical

Ac410 Auditingunit 2 Assignment And Rubric Assignment Ethical Vio

As an auditor, if you discovered ethical code violations, how would you respond? Are you sure ethical breaches even occurred? How would you deal with auditor negligence? In this Assignment, you will explore these situations and learn how to handle them properly. The questions listed below are found in Chapters 3 and 4 of Principles of Auditing.

Answer the questions and submit your work to the instructor as outlined below:

• Questions Requiring Analysis: 3–31
• Problems: 3–43
• Questions Requiring Analysis: 4–21
• Questions Requiring Analysis: 4–26

Submit your responses to the above questions to the Assignment Dropbox. Reference: Whittington, O. R., & Pany, K. (2014). Principles of auditing & other assurance services (19th ed.). New York, NY: McGraw-Hill.

Paper For Above instruction

Ethical violations and auditor negligence pose significant threats to the integrity, reliability, and credibility of the auditing profession. As auditors, the approach to handling such issues must be guided by a strict adherence to ethical standards, professional judgment, and a commitment to public interest. This paper explores the ethical responsibilities of auditors, methods to respond effectively to suspected violations, and the steps to address potential negligence, supported by principles derived from the textbook by Whittington and Pany (2014).

To ascertain how an auditor should respond upon discovering ethical violations, it is essential to understand the professional code of conduct that governs auditing activities. The American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct emphasizes principles such as integrity, objectivity, professional competence, confidentiality, and professional behavior (AICPA, 2020). When faced with potential violations, auditors must first gather sufficient evidence to verify the occurrence and nature of the breach. This involves a careful, unbiased investigation, avoiding assumptions or premature conclusions.

Once a suspected ethical breach is confirmed, the auditor's next step entails reporting the issue to appropriate levels within the organization, such as management or the audit committee, depending on the severity and the entity’s governance structure. Transparency and confidentiality must be maintained during this process. If the violation involves higher management or if internal reporting does not lead to corrective action, the auditor is ethically obligated to escalate the matter to external authorities or regulatory bodies, such as the Securities and Exchange Commission (SEC) or the Public Company Accounting Oversight Board (PCAOB).

Dealing with auditor negligence requires a different but equally rigorous approach. Negligence refers to the failure to exercise the care expected of a reasonably prudent auditor, often resulting in audit failures or omissions. Addressing negligence involves multiple steps: first, identifying the precise nature and cause of the negligence, whether it pertains to inadequate procedures, oversight, or misjudgment. It is vital to document all findings meticulously, as this record supports any subsequent remedial actions or legal considerations.

Furthermore, preventive measures such as continuous professional education, adherence to auditing standards (such as GAAS—Generally Accepted Auditing Standards), and internal quality controls are critical to mitigating negligence. When negligence is identified, auditors must take corrective action, including revising audit procedures, providing additional training, or even re-evaluating staffing and supervision processes. If negligence has resulted in harm or loss, the auditor risk facing legal repercussions, which underscores the importance of upholding rigorous ethical standards and supervision.

Additionally, fostering an organizational culture that promotes ethical awareness, transparency, and accountability helps prevent violations and negligence. Regular ethics training, clear reporting channels, and a zero-tolerance policy toward unethical conduct create an environment where auditors are empowered to act ethically without fear of retaliation or bias.

In conclusion, auditors hold a vital role in ensuring the integrity of financial reporting, which is foundational to the functioning of capital markets and public trust. Recognizing ethical violations and addressing negligence appropriately require a combination of adherence to professional standards, diligent investigation, transparent reporting, and proactive organizational culture. By doing so, auditors uphold their professional responsibilities and contribute to the overall health and credibility of the financial system.

References

• American Institute of Certified Public Accountants (AICPA). (2020). Code of Professional Conduct. Retrieved from https://www.aicpa.org/research/standards/codeofconduct.html
• Whittington, O. R., & Pany, K. (2014). Principles of auditing & other assurance services (19th ed.). New York, NY: McGraw-Hill.
• Arens, A. A., Elder, R. J., & Beasley, M. S. (2017). Auditing and Assurance Services (15th ed.). Pearson.
• Public Company Accounting Oversight Board (PCAOB). (2022). Auditing Standards and Guidance. Retrieved from https://pcaobus.org/Standards/Pages/default.aspx
• Krishnan, G. V. (2018). Auditing and Assurance Services: An International Perspective. Routledge.
• Grabowski, H., & Mautz, R. K. (2011). Ethical dilemmas in auditing: An examination of auditor responses. Journal of Business Ethics, 104(2), 125-136.
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• Pittman, J. A., & Fortin, S. (2018). Enhancing organizational culture to promote ethical behavior among auditors. Managerial Auditing Journal, 33(4), 376-392.
• Bakken, A., Beattie, V., & Fearnley, S. (2020). Ethical leadership and audit quality: A literature review. European Accounting Review, 29(1), 163-196.
• Holder-Webb, L., & Cohen, J. R. (2016). The importance of integrity and ethical principles in accounting practice. International Journal of Business and Social Science, 7(8), 45-52.