The article considers the basic principles of development of auditing and how it is related to the organization of internal control, which contributes to generating fair, transparent and reliable reports of economic entities. The author regards the auditor’s independence as one of the most important peculiarities and principles of auditing defined by international standards on auditing (ISA 200). This is in full accordance with the professional ethics of auditing which is to follow by every representative of the profession. At this point it is necessary to take into account the potential threats to auditor’s independence (e.g. financial, business, labour, and so on) and the circumstances, which may result in potential risks to independence. To minimize the doubts in fairness and objectivity of an auditor, the author defines the system of protection, which includes the firm’s rotation, partner rotation, cooling-off period, prohibited services. The article reviews European and international legislation regulating professional independence of auditors and ethical aspects of their activity, among these, the most important are the Code of Ethics for Professional Accountants issued by IESBA (International Ethics Standards Board for Accountants), the International Standards on Auditing, ISAs, the European Commission Recommendation on May 16, 2002, concerning the independence of the auditor and the last but not least, the Sarbanes-Oxley Act (SOX). From the company’s audit viewpoint, the SOX aims to evaluate the independence to improve the transparency of the internal control. The major costs due to the SOX control activities are compensated with the benefits through lower information risk. In its turn the information asymmetry, namely the lack of information of one of the parties to a contract, determine the occurrence of two followings well-known problems: adverse selection and moral hazard. The article notes that SOX due to its global nature impacts powerfully other economic systems that’s why corporations need a communication strategy for dealing with external stakeholders, which address the conflict between disclosure and secrecy. The responsibilities of the auditors in accordance with the SOX were defined by the PCAOB. A separate part of the article deals with the issues of analyzing competences of COSO (Committee of Sponsoring Organizations of the Treadway Commission) which issued a COSO Report «Internal Control-Integrated Framework». This concept is constantly being improved as a model of the Enterprise Risk Management. The recent changes of internal control system are based on this particular approach. According to the author an important regulatory reference on the independence of the auditor is the Code of Ethics for Professional Accountants. This Code is based on the idea that, during the commitment, the auditor must act in the public interest and his behavior must conform to fundamental ethical principles (including that of independence), to gain confidence and credibility in the public eye. This paper shows the increasing regulation on corporate governance as the answer to the decrease of ethical behaviours in the financial markets. The proliferation of laws in matters of corporate governance was the substantial response to the crisis of the values of business ethics, which has led to numerous financial scandals of recent decades.
|Numero di pagine||15|
|Rivista||UCET, ANALIZ, AUDIT|
|Stato di pubblicazione||Pubblicato - 2015|
- CORPORATE GOVERNANCE, ISA, IAS/IFRS, IPSAS, ACCOUNTABILITY, ETHICS