Auditing and Auditor Role in an Evolving Environment Assignment | Online Assignment

Discussion of an Emerging Issue in the Profession – Students must be able to identify, research, and adjust to new auditing standards, laws, regulations, etc. Groups will be required to identify an emerging issue pertaining to the auditing profession. Examples of issues that the group may wish to address in the project include the following: What is the issue and why is it important? What events led to the change in standards/laws/regulations? What groups are responsible for developing/implementing the proposed change? What are the expected benefits/costs of the proposed change and who is expected to be impacted? Must provide a 5,000-word research paper. The written report should include in-text citations where needed and a complete reference list

Auditing and Auditor Role in an Evolving Environment

Michelle McBean

Texas A&M University- Central Texas

Auditing

ACCT- 4324-110

Dr. Anthony Fulmore

May 5, 2020

Abstract

This paper explores my concept and understanding of the auditors’ role in a shifting environment then explains the role that GAAP measures have impacted in the financial world and more specifically accounting and auditing. The paper will examine their role both some positive and negative aspects of  as it relates to auditing

Keywords: audits, disclosures, whistleblower activity

Auditing and Auditor Role in an Evolving Environment

1. Discussion of an Emerging Issue in the Profession – Students must be able to identify, research, and adjust to new auditing standards, laws, regulations, etc. Groups will be required to identify an emerging issue pertaining to the auditing profession. Examples of issues that the group may wish to address in the project include the following:  What is the issue and why is it important?  What events led to the change in standards/laws/regulations?  What groups are responsible for developing/implementing the proposed change?  What are the expected benefits/costs of the proposed change and who is expected to be impacted?

Auditor’s role – non-GAAP measures • Background: • As part of the Sarbanes-Oxley Act, the SEC adopted new disclosure regulations addressing non-GAAP public company disclosure: notably, Regulation G and amendments to Regulations S-K and S-B (“the regulations”) • Issue: • The reporting, use of, and reliance on non-GAAP measures have increased; however, the auditor’s responsibilities have not changed • Potential implications: • Elevate the level of independent audit assurance regarding compliance with the regulations and other related non-GAAP measurement rules under the SEC’s “Conditions for Use of Non-GAAP Financial Measures” • Enhance comparability, consistency, compliance, and accountability within financial reporting • Provide greater investor confidence • Increase the relevance of work performed by the auditor

Attractiveness of the Profession / Talent

• Background / Issue:
• The potential changes in the audit environment, such as changes in the use of data analytics

and technology, offshoring, and proliferation of non-GAAP measures, may create challenges

for recruiting and retaining top talent. The recruitment and retention of quality individuals is

key to improving audit quality.

• Today’s graduates are different than previous generations and understanding their skills and

demands are important in developing a sustainable workforce. Additionally, consulting and

advisory services may be more attractive to today’s top graduates.

• Turnover at the firms among experienced auditors (including early partner retirements)

appears to be increasing.

• Potential Implications / Discussion Points:
• How should the capabilities needed by auditors change to meet expectations of their roles and responsibilities

in the future? For example, data analytical skills to interpret big data, business acumen skills to assist in the

assurance of more “forward looking” information or non-GAAP measures, and forensic skills?

• Will the impact of mandatory audit firm rotation in Europe cause increased marketing and relationship

building skills to be developed? If yes, are their independence implications for SEC registrants based outside

the US?

• Do auditors have the requisite experience to appropriately understand their client’s industries?
• Is there enough innovation in the audit process itself for today’s graduates who may seek more intellectually

stimulating work earlier in their careers than previous generations of graduates?

• Does the profession do enough to make today’s graduates understand the social utility of the audit?
• How are college curriculums updated to keep pace with the numerous changes in the profession?
• Will the cost associated with attracting talent and developing these skills cause more disparity between big and

small audit firms?

• Can the audit practices of larger firms compete for talent with consulting and advisory services practices?
• Is the work environment at audit firms too intense for younger people?
• Is there a higher attrition rate amongst experienced auditors, and if so, why?
• Why are audit partners retiring earlier? Is it related to the intense scrutiny, increased pressure with continual

change, or the expectation that auditors should be at forefront in the fight against fraud and corruption?What

can be done?

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