Safeguard of Auditor Independence

Topics: Auditing, Audit, Internal control Pages: 3 (617 words) Published: October 8, 2008
Safeguard of auditor independence
(i)Established An Audit Committee
We support the given measure as Sarbanes-Oxley Act of 2002, Section 204 requires auditors reports to audit committee (, such committee is independent non-executive directors provide auditors an independent point of reference than executive directors of the company.

Second, it enhancing the independence of auditors by provides a direct channel of communication between top management and the auditors. As such, it relieves the Board from detailed involvement in the review of result of audit activities.

Third, the audit committee able to review with the external auditors their audit plan and evaluation of internal control simultaneously promotes fair reporting from the prospective of shareholders, creditors and employees (Auditing and Assurance Services in Malaysia, 3rd Edition 2007). (ii)Rotation of Audit Partner

Sarbanes-Oxley Act of 2002, Section 203 stated audit partner must rotate every 5 years ( We do not support as regular rotation increase the risk of audit failures because significant time required developing the necessary knowledge of a client to ensure the audit approach is effectively (

The auditor may reluctance to invest time and resources in learning the client’s organization and activities when the auditor’s mandate is short and rotation date approaches could lose interest in the client. 10

It involved significant cost for both client and auditor. The investment of time and resources in helping new auditor acquaint himself with the organization’s system and procedures is time-consuming and costly as similar for the auditor. (iii)Restrictions on Non-Audit Services

Section 201under Sarbanes-Oxley Act 2002 stated it is unlawful for an auditing firm to provide both audit services and non-audit services simultaneously ( We support the recommendation because it...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Auditors Independence Essay
  • Essay on auditor independence
  • Independence of External Auditor Essay
  • auditor independence Essay
  • Auditor Independence
  • Auditor Essay
  • A Framework for Auditor Independence Essay
  • The Influence Of Auditor Independence Regulation Essay

Become a StudyMode Member

Sign Up - It's Free