02 April 12 Monday 04:30:01

Auditors Independence
A Study on ACNABIN Chartered Accountants Firm

Prepared By: Md. Ejaj-Ur-Rahaman ID : 082-11-326

Auditors Independence

Objectives of the Study

Primary/General Objective: The main objective of the study is to know about the Auditors Independence through a study on ACNABIN-Chartered Accountants Firm.

Auditors Independence

Objectives of the Study

Secondary Objectives To obtain knowledge about the auditors independence risk measured by ACNABIN. To know the factors that impairs auditors independence. To suggest future critical needs for the improvement of the Auditors Independence.

Auditors Independence

Methodology of the Study

Nature of the Study:

An exploratory research.

Primary Data Data Used: Secondary Data

Auditors Independence

Methodology of the Study

Primary Data Collection Method - Questionnaire method

Sampling Technique

- non probability judgment sampling

Target Population:
articled students, audit managers, managing partners and clients of the firm.

Auditors Independence

Audit

- An independent statements.

examination

of

financial

Auditor

-The purpose of an audit is to enhance the credibility of financial statement by providing written reasonable assurance

Independence

Auditor's Independence

Auditors Independence

Audit

Auditor
-A person who conducts an audit. Also refers a listener , an observer Independence

Auditor's Independence

Auditors Independence

Audit

Independent

Auditor

-Not influenced or controlled by others in matters of opinion, conduct etc.

Independence

Auditor's Independence

Auditors Independence The purpose of an audit is to enhance the credibility of financial statements by providing written reasonable assurance from an independent source that they present a true and fair view in accordance with accounting standard.

Audit

Auditor

Independence

Auditor's Independence

Auditors Independence
Cornerstone of the auditing profession.
Foundation of the publics trust in the accounting profession.

Independence of Mind (Real Independence)

Independence in Appearance (Perceived Independence)

Auditors Independence

Independence of Mind (Real Independence)

Independence in Appearance (Perceived Independence)

BSA (para: 290.8)

Ethics morally right or wrong

Auditors Independence

Independence of Mind (Real Independence)

Independence in Appearance (Perceived Independence)

BSA (para: 290.8)

Together, both forms are essential to achieve the goals of independence.

Auditors Independence

Factors that Impairs Auditors Independence

Financial Interests (BSA Para 290.104) financial investments- SEC found that
KPMG violated the auditor independence

Business Relationships

Family and Personal Relationships

Auditors Independence

Factors that Impairs Auditors Independence

Non-audit Services
Bookkeeping Tax Consultancy Internal Audit Service

Auditors Independence

Exceptions

to Inheritance and gifts.

Auditors Independence

STATE OF AFFAIRS IN ACNABIN Chartered Accountants Firm

Turnover Partition
Audit Services Annual/Statutory/Interim audit 40% Total Turnover through Audit Services 40% Non-Audit Services Accounts preparation (including data processing and book-keeping) Tax Insolvency Financial Advisory Services Management Advisory Services 10% 20% 10% 15% 05% Total Turnover through Non-Audit Services 60% Total 100%

Auditors Independence

STATE OF AFFAIRS IN ACNABIN Chartered Accountants Firm

Tests of Prominent Non-Audit Services provided by ACNABIN

Auditors Independence

STATE OF AFFAIRS IN ACNABIN Chartered Accountants Firm

Test of confirmation from the audit staffs regarding independent relationship status with clients they are auditing

Auditors Independence

Findings

1. 2. 3.

Unhealthy monitoring system of ICAB. Extermination of Peer Assessment/Audit Interested to continue audit relationship year after year.

Auditors Independence

Findings

4. 5. 6.

Unwilling to disclose non-audit fees & services. Extinction of fee-setting regulatory body. Positively, ACNABIN doesnt engage itself in auditing with whom they have financial or business relationship.

Auditors Independence

Possible Future Developments

Rotating External Auditors Peer Assessment

Service Limitations
Disclosure Rules Fee setting regulatory body

The End