Accuracy of financial records is key to the success of any organization. All firms need to ensure that their records actually reflect their operations. It is for this reason that companies hire auditors. Essentially, auditors are charged with the primary role of examining a company’s books (Hayes et al., 2014). The purpose of the examination is to ensure that the books are accurate and that the records are in line with accounting standards and procedures. In most cases, it is a company that chooses to bring in an auditor. In other instances, companies are forced to expose their books to scrutiny by an auditor. These cases include those where it is suspected that a company has committed some wrongdoing. This essay focuses on auditors, the role that they perform and the need for them to conduct themselves ethically.
There are a number of roles performed by an auditor. One, the auditor routinely collects and analyses spreadsheet data. Two, the auditor is charged with the responsibility of examining a firm’s records (“Senior Auditor”, n.d). The auditor may also be required to analyze the financial control systems that a company has put in place. Risk management is another mandate of an auditor (“Senior Auditor”, n.d). The auditor is expected to examine the company’s operating environment for any risks that could cause damage. The preparation of reports and financial documents is the other element of the job description of an auditor (“Senior Auditor”, n.d). These reports and documents are usually submitted to such third parties as regulators and government agencies. An auditor is also expected to routinely examine procedures and policies to ensure full compliance. This discussion is not exhaustive since an auditor may be assigned more roles depending on the needs of an organization.
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In 2002, the Sarbanes-Oxley (SOX) Act was enacted. The main purpose of this law is to shield investors from fraud committed by companies (Amadeo, 2016). One of the key provisions of this act is that the senior management of any organization must ensure that financial reports are accurate. The other important provision requires auditors and the senior management to put in place an internal control system for eliminating fraud (Amadeo, 2016). The provisions of the SOX Act underscore the importance of an auditor. Many senior executives lack the skills and knowledge needed to verify the accuracy of accounts. Additionally, the establishment of control systems can only be done with the guidance of a competent accounting professional. An auditor would allow any organization to fully comply with these requirements of the SOX Act.
Various bodies that regulate the operations of auditors require their members to be ethical at all times. Some of the ethical principles that auditors are required to uphold include integrity, objectivity, competency and confidentiality (“Code of Ethics”, n.d). The need for an auditor to be ethical cannot be overstated. Ethical conduct allows an auditor to serve the best interests of a company. For instance, it is only when an auditor is ethical that they can identify any fraudulent activities that could cause the company to lose money. The other reason why auditors need to be ethical is because ethical conduct enables auditors to shield organizations from external threats such as prosecution. There have been cases where companies have faced legal liabilities as a result of unethical conduct by their auditors. For the interests of a company to be guaranteed, the auditor must be ethical.
One of the vital elements of professionalism is competence. In many professions, individuals are required to undertake training and examination before they are certified to practice as members of the profession. In the United States and many other countries, those practicing in the field of accounting need to possess a CPA certification. It is important for auditors to be CPA certified. This is because a CPA certification demonstrates that an individual is competent and that they have been well-trained (“Importance of Certification”, n.d). The certification also provides one with the authority to represent the profession. The other role that a CPA certification performs is that it shows that one is familiar with key issues faced by members of the accounting profession (“Importance of Certification”, n.d). With a CPA certification, an auditor makes it clear that they are competent and well-versed in accounting matters.
In conclusion, everyday, auditors continue to perform important functions. They ensure that the financial records of an organization are accurate and in compliance with accounting standards. An auditor also sees to it that an organization has implemented procedures that eliminate the threat of fraud. For auditors to perform their functions properly, they must uphold ethical standards. It is also vital for auditors to possess CPA certification and other relevant professional qualifications.
References
Amadeo, K. (2016). Sarbanes-Oxley Summary: How it Stops Fraud. Retrieved 20 th May 2017 from https://www.thebalance.com/sarbanes-oxley-act-of-2002-3306254
Code of Ethics. (n.d). Retrieved 20 th May 2017 from https://na.theiia.org/standards-guidance/mandatory-guidance/Pages/Code-of-Ethics.aspx
Hayes, R., Dassen, R., Wallage, P., Gortemaker, H. & Schilder, A. (2014). Principles of Auditing: An Introduction to International Standards on Auditing. Upper Saddle River, NJ: Prentice Hall.
Importance of Certification. (n.d). Retrieved 20 th May 2017 from http://cpapro.eu/programmes/cpa-new-curriculam/the-importance-of-crtification/
Senior Auditor. (n.d). Retrieved 20 th May 2017 from http://www.theiia.org/chapters/pubdocs/99/FIS_Global_Senior_Auditor.pdf
