Trends - Methodological Issues - Opportunities MyAssignmenthelp - com

Question: Discuss about the Trends, Methodological Issues, and Opportunities. Answer: Introduction: The overall different types of threats, which could be faced by auditors to freely conduct the audit process. Any personal having controlling interest in the audit could decrease the audit Independence and raise the overall doubt in audit report (Wong and Millington 2014). In addition, the circumstances of situations and effective in the case study have different types of auditor freedom threats, which are depicted as follows. Situation 1: The situation mainly depicts that auditing companies could not provide any kind of no retreating services to the company, as depicted in the rules of audit Association. The overall situation mainly state that any kind of non-audit activities could raise advocacy regarding the auditors opinion towards a company (Srivastava, Rao and Mock 2013). Thus, to reduce this kind of advocacy the auditor must control his actions regarding non added activities. Situation 2: The Company is providing non-monetary benefit to the audit firm, which is unethical and increases the chances of manipulation in audit independence. It is stated that auditors who use non-monetary benefit excluding from the benefits provided in the contract are subject to control and manipulation from the organization. This manipulation could eventually hamper the overall audit independence. Situation 3: The situation mainly detects that a family members was involved in the auditing committee, which increases the chance of manipulation and decreases audit independence. The father of the auditor is the financial controller of the company, which nullifies any kind of independence that could be enjoyed by the auditors (Simnett, Carson and Vanstraelen 2016). According to the audit independence, purity is any link between the auditing company and auditors could have the overall audit report. Situation 4: This situation mainly depicts the sympathetic condition of auditors if continuous interactions are conducted with directors and staff. In addition, it provides non-auditing facilities to the company like helping them out with taxation and accounting transaction.This mainly increases the chance of reduced audit Independence as the auditor is self-auditing his own work (Marques, Santos and Santos 2013). Recognition of any shields to the previously mentioned threats There are 4 different types of methods which could be taken by the auditor to increase Independence of the auditors. Development of transparent audit committee, compiling with independence of auditors need, changing the audit partner, and overseeing auditors independence. With the help of these measures, companies and auditors are able to minimize the negative impact of unethical measures on the audit independence. Junior, Best and Cotter (2014.) stated that use of adequate measures could allow auditors to improve the audit report and in turn increase Authenticity among potential investors or stakeholders. On the other hand, Eilifsen et al. (2013)argued that companies using monetary benefit as a lucrative offer could increase the unethical measures and reduce efficiency of the audit report. Majority of the companies change the audit partner in order to reduce any kind of relationship building impact that might hamper the viability of the audit report.In addition, the company also nee ds to form a committee who she is the overall transparency and auditors evaluation. This committee will mainly be responsible to adhere and acknowledge any kind of miscommunication or violation of rules conducted by auditors on the behalf of the company. The use of above depicted methods could eventually help the company to maximize the authenticity of the audit report and increase trust among potential stakeholders. On the other hand, DeFond and Zhang (2014) argue that due to difficult times companies in 2008 used the audit report as a cover there losses and boosted the share price. This manipulation of the overall audit Independence could be reduced if the company promptly adopts the above methods. These methods should mainly be imposed by the stakeholders of the company for reducing any kind of unethical measures taken by the management. The risk associated with operations is mainly determined to be the inability of the company to support the purchase of spare parts according to its requirement. In addition, it could be said that if company is not stocking adequate spare parts in the inventory it might phase voltage in their production system.This halted could only arise due to the in capability of the company to support its future production needs.Any slow in production system could mainly arise there is involved in its operational activities. Thus, any kind of reduction in maintenance of adequate inventory could lead to decline in reproduction output of the company. Some of the researcher stated that use of adequate ERP systems could allow the management to reduce the operational risk faced by the production department (Byrnes et al. 2015). Without adequate inventory system a company's operational risk could not be minimized where the chances of stock block it could be identified. Reviews of adequate inventory system could allow management to reduce the strategic risk, which might arise from their operations. The strategic risk involved a blockage of capital, which is conducted by the company due to accumulation of high inventory (Arens et al. 2015). Spare part inventory allocation is used in supporting the overall production facility of the company. Furthermore, excess storage of spare parts in the inventory system could lead to Capital blockage and raised expenses of the produce goods (Louwers et al. 2013). Thus, adequate inventory management system should be deployed by the company to reduce any kind of blockage in the flow of capital. the overall reduction in the strategy dress could be conducted by using effective inventory management system which allowed companies to identify the relevant capital blockage and improve their inventory system. use of ERP system could help The overall financial capability of the company and reduce its capital blockage in inv entories. Audit risks and effect on account balance The identify risk, which are mentioned could influence the audit risk also affect viability of the audit report. These risks are mainly supporting the audit risk that might produce efficiency of the audit report (Marques, Santos and Santos 2013). Strategic risk mainly supports the inheritance audit risk, which might arise during the preparation of the audit report. II risk, which might arise from audit procedures, is the omission has that is faced during the recording of the transaction. This misstatement mainly hampers the overlay audit viability and increase the audit risk. Mention that with the help of adequate audit procedures auditors are able to minimize the risk statements, which are present in the annual report of a company. The identified operational risk has a problem of water detection rest, which might increase material misstatement condition and depict wrong financial condition of the company. The overall financial condition of the company is mainly threatened with the risk of audit detection is it my tamper financial condition of the company (Ojala et al. 2016). Both inherent and detection risk Code effectively influence the balance of accounts of the company. the relevant accounts which are threatened from the risk account, sales account, inventory account, and purchase account. The risk might affect the above defected accounts and hamper the financial condition of the company. This could eventually use viability of the financial report, which is used by investors to detect the actual financial condition of the company. Reference List Arens, A.A., Elder, R.J., Beasley, M.S. and Jones, J., 2015.Auditing: The Art and Science of Assurance Engagements. Pearson Canada. Byrnes, P.E., Al-Awadhi, C.A., Gullvist, B., Brown-Liburd, H., Teeter, C.R., Warren Jr, J.D. and Vasarhelyi, M., 2015. Evolution of Auditing: From the Traditional Approach to the Future Audit.Audit Analytics, p.71. DeFond, M. and Zhang, J., 2014. A review of archival auditing research.Journal of Accounting and Economics,58(2), pp.275-326. Eilifsen, A., Messier, W.F., Glover, S.M. and Prawitt, D.F., 2013.Auditing and assurance services. McGraw-Hill. Junior, R.M., Best, P.J. and Cotter, J., 2014. Sustainability reporting and assurance: a historical analysis on a world-wide phenomenon.Journal of Business Ethics,120(1), pp.1-11. Louwers, T.J., Ramsay, R.J., Sinason, D.H., Strawser, J.R. and Thibodeau, J.C., 2013.Auditing and assurance services. New York, NY: McGraw-Hill/Irwin. Marques, R.P., Santos, H. and Santos, C., 2013. A conceptual model for evaluating systems with continuous assurance services.Procedia Technology,9, pp.304-309. Marques, R.P., Santos, H. and Santos, C., 2013. A conceptual model for evaluating systems with continuous assurance services.Procedia Technology,9, pp.304-309. Ojala, H., Collis, J., Kinnunen, J., Niemi, L. and Troberg, P., 2016. The Demand for Voluntary Audit in Micro?Companies: Evidence from Finland.International Journal of Auditing,20(3), pp.267-277. Simnett, R., Carson, E. and Vanstraelen, A., 2016. International Archival Auditing and Assurance Research: Trends, Methodological Issues, and Opportunities.Auditing: A Journal of Practice Theory,35(3), pp.1-32. Srivastava, R.P., Rao, S.S. and Mock, T.J., 2013. Planning and evaluation of assurance services for sustainability reporting: An evidential reasoning approach.Journal of Information Systems,27(2), pp.107-126. Wong, R. and Millington, A., 2014. Corporate social disclosures: a user perspective on assurance.Accounting, Auditing Accountability Journal,27(5), pp.863-887.