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1. #Acc 491 generally accepted auditing standards paper drivers#
2. #Acc 491 generally accepted auditing standards paper license#
3. #Acc 491 generally accepted auditing standards paper professional#

The best-known example is the Sarbanes-Oxley Act in the United States. In the past decade in particular, we have seen a large increase in auditor-related regulation globally as various accounting and auditing scandals triggered deeper audit regulation under the premise of improving audit quality. Auditing is heavily regulated, and both demand and supply/production of auditing is subject to various forms of regulation. In this chapter, we will only zoom in on economic theories that relate to audit regulation and how regulation has developed.

#Acc 491 generally accepted auditing standards paper drivers#

There exists a rich academic literature that investigates the various drivers that affect financial statement auditing and audit quality (for reviews, see DeFond and Zhang, 2014 Francis, 2004 Langli and Svanström, 2014 Lennox and Wu, 2017 and Vanstraelen and Schelleman, 2017). Given all these aspects, auditing is a complex phenomenon to study and understand. Because auditing is a human activity conducted by individuals, the quality of a specific audit is conditional on individual auditor characteristics, the incentives that auditors face, as well as the audit (and audit- and accounting-related) regulation. There is also a risk of litigation against the auditor in the case of malpractice. Who needs an audit, who can supply an audit, and the conditions under which the two parties can contract for audit services are all subject to various forms of regulation. However, audits and the audit market are also very heavily regulated. In that market, auditors compete with each other to obtain new clients. Further, audits are economic goods in the sense that a market exists to match those who will supply an audit with those who would demand an audit.

#Acc 491 generally accepted auditing standards paper professional#

In the course of an audit, specialized technology is used to augment the professional expertise of individuals.

#Acc 491 generally accepted auditing standards paper license#

An audit is conducted by professionals who have acquired the specific skills and knowledge necessary to perform the audit, and who possess the appropriate license to mark themselves out as a professional. All these aspects of auditing are interrelated and jointly affect what the eventual quality of an audit will be. Financial statement auditors should be independent from the firm to avoid collusion with management, and their main role is to provide assurance to the users of the financial statements that the latter are reliable.įinancial statement auditing is a professional, economic and regulated activity executed by individuals with the help of audit technology (Hay, Knechel, and Willekens, 2014). External auditors are technical experts that can mitigate this information risk by investigating the financial statements of a company and the underlying transactions, and attesting to whether the financial information that management provides is reliable or not. Company management may have incentives and opportunities to “lie” about the true economic condition of the firm, and to provide financial information that is distorted. Moreover, even if they have so, they do not have access to the inside information that corroborates the financial statement information. Many stakeholders do not have financial and accounting skills to judge whether the information that management provides is reliable. It is the management of the company that prepares the company’s financial statements. This information can be used by shareholders and other stakeholders for decision making-for example, to decide whether to buy or sell shares in the company, or whether a loan should be granted or extended to the firm. External (financial statement) auditors provide assurance about the reliability of the financial information that companies issue.