AUDITOR INDEPENDENCE AND AUDITOR SCEPTICISM Essay

AUDITOR INDEPENDENCE AND AUDITOR SCEPTICISM - Essay Example To justify these responsibilities an auditor must possess certain personal qualities such as honesty and ethicality. To be precise, the auditor whether internal or external, has his responsibilities towards the governance of an organisation and its quality (The Institute of Internal Auditors, 2005). However, in the realistic phenomenon auditors have been constantly judged on their personal qualities, which directly indicate to the appropriateness of the concept of auditor independence and scepticism. The concept of auditor independence and scepticism were both raised with the focus on the nature of responsibilities which a professional needs to abide while ensuring the quality of the financial statements of a company (Kleinman & Et. Al., 2001). Nature of Auditor Independence and Auditor Scepticism The Nature of the Auditor Independence To define the term ‘Auditor Independence’, authors have referred it as the foundation of auditing in a realistic behaviour. Relying on th e nature of auditing, auditors need to identify, control and eradicate the inefficiency of the financial statements produced by the accountants of a firm in order to ensure the accurate status of the financial health of the organisation. Auditor independence, in this scenario assists the auditor to render value-added services to the client and the community at large. Auditor independence is strongly influenced by the audit process. The process instigates from the selection procedure and ends by reporting the findings and opinion of the auditor. Therefore, the concept of audit independence emerges to be crucial with due consideration to its importance and nature. It is in this context, that audit independence is implemented based on three basic principles, i.e. the auditors must belong to the external environment of the organisation and therefore are prohibited to be a part of the client organisation, the auditors are also proscribed to audit their own workings and cannot play any ad vocacy role to support the organisation if found guilty (Rezaee, 2007). Nature of Auditor Scepticism Auditor Scepticism is another concept introduced in the auditing practices, which refers to the personal skill of the auditors to challenge the management’s statements in order to critically evaluate the accuracy of the financial statements of an organisation. However, scepticism needs to be controlled due to the fact that challenging almost any and every assertion of a well established company will in turn affect the willingness to publish the financial statements (Peursem, 1989). The factors which play a crucial role in determining the appropriateness of scepticism are the regulations prescribed in relation to auditing and the financial practise of the company and the nature of the corporate. To be precise, the nature of auditor scepticism indicates to be an attitude of questioning the management and identifying and eliminating the probable chances of producing misstatements related to error or deception. It is of vital importance due to the fact that it not only ensures the auditing to be confirmed with extra professional efficacy but also proves supportive in performing the task rigorously. However, the level of