No Plagio At All: 2 Pages APA Format Include References

No Plagio At All1 2 Pagesapa Formatinclude References

You have met with a potential client, who informs you that all the employees and officers of his company are bonded. For this reason, he is requesting that under these conditions that you not look at his company's system of internal control so his company may reduce the cost of an audit. Prepare a letter to the potential client explaining the following: Why you can or cannot honor his request. The reasoning for your decision. The potential ramifications of your decision. Based on your choice of action, what the perceived corporate governance of the company would be to the public. OBJECTIVES Understand the risks that exist in both the business and auditing environment and a problem-solving methodology for assessing risks Compare and contrast internal and external auditing in terms of their role in business and society, their goals and objectives, and their processes and practices.

Paper For Above instruction

Dear [Potential Client],

Thank you for reaching out and sharing your concerns regarding the upcoming audit. I understand that your company’s employees and officers are bonded, and you have requested that I refrain from examining your internal control system in order to reduce audit costs. While I appreciate your position, I must clarify why I cannot honor this request, the implications of such a decision, and how it relates to corporate governance and overall audit integrity.

As an auditor, my primary responsibility is to provide an unbiased and comprehensive assessment of your company’s financial health and internal controls. Internal controls are a fundamental aspect of the governance framework that ensures reliability of financial reporting, compliance with laws and regulations, and operational efficiency. These controls also serve as safeguards against fraud and misstatements. By examining your internal control system, I can identify potential weaknesses and areas susceptible to risk, which directly impacts the credibility of financial statements and the trust of stakeholders.

Refusing access to this vital component of the audit process compromises the quality and completeness of the audit. Such an omission could lead to an incomplete assessment, increasing the risk of undetected errors or fraud. Furthermore, it would set a questionable precedent, potentially undermining the integrity of the audit and violating professional standards set by auditing bodies such as the American Institute of CPAs (AICPA) and the Public Company Accounting Oversight Board (PCAOB). These standards emphasize the importance of evaluating internal controls as part of a thorough audit process (AICPA, 2022).

Regarding the ramifications of denying access to internal controls, several issues arise. Firstly, it could diminish the perceived independence and objectivity of the audit. Stakeholders, including investors, regulators, and customers, expect auditors to perform comprehensive assessments to ensure transparency and accountability. Secondly, it could lead to legal or regulatory repercussions if the omission results in financial misstatements or fraud going undetected. Moreover, refusal to examine internal controls could damage the company’s reputation, portraying it as non-compliant with standard audit procedures and standards of corporate governance.

From a corporate governance perspective, transparency and accountability are crucial to maintaining public trust. If a company restricts auditors from evaluating its internal controls, it may be perceived publicly as lacking robust governance mechanisms. This perception can weaken investor confidence, increase the company's cost of capital, and attract regulatory scrutiny. Conversely, a healthy governance framework that supports transparency and comprehensive audit processes demonstrates the company’s commitment to sound management and risk oversight.

In conclusion, while the client’s desire to reduce audit costs is understandable, the integrity of the audit process mandates a full examination of internal controls. This not only aligns with professional standards but also safeguards the company’s reputation and stakeholder interests. The importance of internal controls in promoting good corporate governance cannot be overstated, and their evaluation remains a core component of an effective audit. Ultimately, transparency and thoroughness in auditing reinforce public trust and contribute to a more resilient business environment.

Sincerely,

[Your Name]

[Your Position]

[Your Contact Information]

References

  • American Institute of CPAs (AICPA). (2022). AU-C Section 315: Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement. Retrieved from https://www.aicpa.org
  • Public Company Accounting Oversight Board (PCAOB). (2023). Auditing Standards and Rules. Retrieved from https://pcaobus.org
  • Gelter, H. (2009). Corporate Governance and the Role of External Auditors. Journal of International Business, 14(3), 245-258.

Related Assignments