The 21 st Century Public Company Audit Summary Essay

The 21 st Century Public Company Audit Summary - Essay Example Thus the government authorities passed under the Bush administration to have a strict watch over all the companies and auditing firms formed new standards. These standards require all the auditing firms to abide by the standard procedures defined within their scriptures and have also expanded the horizon of the minimum requirement for an auditor about having the knowledge of operation of its clients and /or companies. These standards include ; The bill passed by president bush is known as the corporate and auditing accountability and transparency act of 2002 also known as Sarbanes-Oxley (SOX) act. SOX is an effective measure taken towards restoring investors interest in the public limited companies. SOX also made another governing body known as public company accounting oversight board. Within two years this body PCAOB placed three major auditing standards. The question that how well these standards can clear the overall view is still unanswered. However, the introduction of these new standards and policies will surely increase the quality of auditing performed. The one additional thing that matters to the auditors now is the identification of the methodology of implementing these standards in their auditing practices in a foolproof and transparent manner. The introduction chapter gives a brief over view of the concerns of the government and its new policies regarding them. However, to what extent will the policies and standard be successful in making sure that every thing goes legal and legitimate is yet to be determined Chapter 2: Auditing standards have been facing many changes due to the changing business environment. Right from the time of simple book keeping till the time the financial statements are made, the techniques of auditing were being required to adapt to certain changes for the sake of such events. Companies had been growing large; large enough to stop any auditing firm from doing the detailed evaluation of the entire book keeping stuff. Thus, now the emphasis is on monitoring the internal controls of a company. As per the SOX section 404, internal auditing by public limited companies is a common standard procedure carried out by all within as well as outside U.S. The auditing now also includes checking on the inventories declared and the accounts receivables identified in the balance sheet(s). The most significant step was the introduction of audit risk model (ARM). The risk auditing includes completeness, obligations, correct valuation, presentation and disclosure of certain elements. If any de viation is found by the risk test, the internal auditor is supposed to take the required corrective action to bring the level of risk to the tolerable level or considerable range. While performing disclosure of certain events, a couple of evidences are acquired to support each n' every element. EBS is the minimum requirement set to act as a source of evidence. Auditors need to base their assessments on a couple of evidence and standards. Feedback: This chapter is about controlling the risk factor by internal auditing practices and controls. This requires a honest internal auditing department to implement policies avoiding any risks, as implied by regulations. Thus this is easier for the auditing firms to have a