The Role of Safeguards in Strengthening Independence Essay - 1

The Role of Safeguards in Strengthening Independence - analyze ExampleWhile this is so, manipulation of the studying bodies is completely inevitable as these bodies atomic number 18 appointed and paid by the client. However, it is possible to optimize freedom by neutralizing the threats that put independence at stake. Some threats that affect independence include self interest threats, self look backward threat, management threats, advocacy threats, familiarity threats and intimidation threats. In this light, plan and deploying effective safeguards will increase the level of analyzeor independence to and moderate single in their work. This feces be achieved through the mandatory auditor rotation, peer review, independent auditor appointing, free setting and prep of effective audit committees.Mandatory Auditor RotationMandatory auditor rotation is the act of oblige all financial organizations to adopt and engage a different auditor each financial stratum to avoid the pref erence of a single auditor. Often, the management prefers to hire the same auditors every year to find out that they are able to manipulate them to provide audit results that conform to the will of the management (Chung 2004, p. 8). This inclination of the audit results to the managements opinion undermines independence and reduces the integrity of the end results. In this view, mandatory auditor rotation will ensure that the familiarity and the management threats are suppressed and the audit bodies have a better chance to provide results that reflects the adjust image of the organization (Chung 2004, p. 8). According to Forbes (2013, Para. 2), the US House of Representatives voted for mandatory auditor rotation as unity way of setting the audit bodies free from manipulation. Peer Review In a peer review audit, after the principal auditor completes the audit change, other qualified pros evaluate the work to verify its integrity and ensure that the financial statements are in ac cordance with those of the financial investors. This is a quality assurance process that aims at reducing whatever errors that may have occurred during the initial accounting process. In addition, this helps to reduce any form of data manipulation that may have been done intentionally under the influence of any independence threat (Allen and Siegel, 2002). Although this process may be quite expensive, it ensures that independence threats are neutralized and much credible results are attained. Independent Auditor appointing and free setting In this process, the role of appointing a professional auditor is withdrawn from the financial investor or client and dedicated to another body. The International Organization of the protection commission (2002) states that the role of client in appointing the auditor provides a weakness in the independence of the audit results. Often, organizations will choose those auditors that they feel are easy to manipulate or threaten to ensure that the y are able to cover up or pursue personal interests by imposing their own opinions on these professionals. To reduce this threat, an independent appointing body should be constituted to ensure that familiarity threats are eliminated by selecting professionals that are least(prenominal) affiliated to the firms. For instance, the government agencies keister be chosen to appoint audit bodies for financial investors. Alternatively, shareholder committees should be formulated to take up this role of appointing a credible professional audit body that can provide credible results. In essence, giving this role to an