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Essay On Significance Of Independence

The Importance of External Auditor’s Independence Essay

1614 WordsNov 27th, 20127 Pages

The Importance of External Auditor’s Independence

According to Gillespie, Lewis and Hamilton (2004:221) an audit is:
“a scrutiny of the accounts by a qualified auditor who carries out checks on the figures so as to establish whether the accounts show a true and fair view of the results and the financial position of the entity.”
According to Wikipedia (2011a), auditor independence refers to “an attitude of mind characterized by integrity and an objective approach to the audit process”. Independent auditing has been an important part of the corporate monitoring system since the mid-1930s, when it became a legislation requirement after the Great Depression. This was caused by reckless spending by corporations in the late 1920s (Kim,…show more content…

The auditing firm then also became defunct after a jury ruled against them for obstructing justice; after they had shredded documents of their auditing of Enron (Thomas, 2002). This was evidence to the potential of failure in independence between the corporation and the auditor.
Therefore the lack of auditor independence may impact adversely on an audit in many different ways. Other than the two examples previously mentioned above, there have been many other corporations that experienced adverse reactions due to bad accounting practices and the lack of auditor independence. The independence of external auditors had been brought into question because of the potential influence the corporations had on its auditors. It used to be the duty of the corporation’s CFO to employ an external auditor. Therefore if the auditor’s report was not particularly favourable for the CFO, the CFO could decide to fire them and choose an auditor who would be willing to express a much more favourable view of the financial accounting of the corporation. This then led to the Sarbanes-Oxley Act of 2002 which gave the responsibility of choosing an auditor to an audit committee rather than the CFO (Locatelli, 2002). However there are still many other corporations that have experienced problems as a result of the lack of auditor

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The midnight of August 15, 1947 is memorable for every Indian on earth, as it is the time, when India gained independence from the stranglehold of the mighty British. The otherwise suppressed tri-colored flag of India was given its due respect, when it was hoisted in the midnight on the Independence Day.

 

Since then, the red-letter day is celebrated with pomp and gaiety, across the length and breadth of India. Cultural programs and flag-hoisting ceremonies are the predominant affair of the day, while colorful kites fill the sky in the evening, to symbolize freedom. People indulge themselves in remembering the heroes of the freedom struggle and pay homage to them

All the patriotic hearts rejoiced at seeing India becoming a sovereign nation and the triumph of hundreds and thousands of martyred souls. It was a birth of a new nation and a new beginning. The only fact that marred the happiness of the fruits by the blood of martyrs was the fact that the country was divided into India and Pakistan and the violent communal riots took away a number of lives.

I always actively participated in the plays and drama conducted in my school and college on Independence day and loved draping myself in a saree and playing various characters throughout the years. Independence day is very close to my heart, I cannot even begin to imagine the plight of the mothers who lost their son in the battle to gain freedom for our country  but it is a matter of regret that we have forgotten the spirit of this glorious day.

I feel we observe this day superficially. We forget the importance of this day soon after the evening. We attach too much importance to our individual freedom rather than to the national independence. We want to grow without thinking at all about the growth of the country. We must vow to safeguard the independence of our country.

JAI HIND

DISCLAIMER : Views expressed above are the author's own.

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