Finance - Audit and Assurance Essay Example | Topics and Well Written Essays - 5000 words

Finance - Audit and Assurance - Essay eventThus, this difference in the use up of the auditors and the clients makes it tough for the auditors to remain honourable while dealing with the clients (Rennie & et. al., 2006). Accountancy and auditing be possessed of been referred as complicated as well as practical procedures. In comparison to these characteristics, ethics could be considered to be far less complicated. Ethics can be described to be the honest, loyal, truthful and unquestionable way of performing an action. It is considered to be significantly important for auditors to perform their actions and their ways of working in an ethical manner. Ethics is required to be paid attention in case of auditing for the reason of reducing assay with regard to grave illegal actions (Campbell & Houghton, 2005). Auditing is concerned with dealing with financial statements and accounts of an organisation. Therefore, this process needs adequate compliance with ethical manners or specif ication. This is important as this would help to keep away the auditor from acquire involved into any kind of legal liabilities or earn a bad reputation (Campbell, 2004). unethical dealing by an auditing firm named Arthur Andersen gave rise to the scandal of Enron who was one of the firms client. The revelation of the turpitude and the deliberate fraud proved fatal for both the company, Enron as well as for Arthur Andersen. The company was compelled to hold up itself to be a bankrupt and the subsistence of the ace auditing firm came to an end with the exposure of this scandal (Cunningham & Harris, 2006). Difference of engagement in the Auditing Profession It has been already mentioned earlier that corruption is considered to be a result of difference of interest between the clients and the auditors. However, it requires to be mentioned in this context that there could be various kinds of differences of interest in the descent of auditing. A proper analysis of the Enron case wo uld assist in providing a lucid understanding of this fact. The business model of Enron was stated to be quite complicated as it involved a broad stretch of products from trading functions, physical assets as well as going beyond the national borders. All these factors broad the boundaries of accounting. Enron took the opportunity of exploiting these accounting boundaries to the maximum in controlling its revenues along with its balance sheet so as to depict a favourable performance scenario. However, in this case two matters emerged out to be highly problematic for the company. The companys transactions connect to trading engaged complicated contracts which involved elongated time period. The form of accounting followed by the company compelled the management of the company to predict its future prices related to the energy operations along with the rates of interest. It was also found that the company depended broadly on the financial dealings that were considered to be quite controlled and engaged in developing or creating special purpose entities. These cross dealings involved sharing the possession of particular flows of cash as well as risks with lenders as well as investors from outside. The