200- 300 word response the following statement about role of the auditor in a free market economy
One of the main roles of an auditor in a free market economy is to ensure accurate information in the absence of regulatory requirements. A free market economy is based on supply and demand with little or no government control according to Investopedia.com. It is where buyers and sellers are allowed to trade freely based upon a mutual agreement without the interference of state taxes, subsidies, or regulation. A free market economy can only exist if accurate, reliable data is available. There is a great deal of speculation but very little hard evidence concerning the precise levels of accountability. This is where auditor’s role is very important.
Auditing plays a unique role in our economy. By law, all companies whose securities are available to the general public through U.S. exchanges are required to have their financial statment audited by an independent registered public accounting firm (U.S. Chamber of Commerce). Auditors contribute to an effective capital market by providing independent evaluations about the reliability of an organizations financial statement or the efficiency and effectiveness of various aspects of its performance (Rittenberg, 2008). Auditors must gather evidence to determine whether the financial statements are fairly presented in accordance with Generally Accepted Accounting Principles (GAAP) and issues an opinion to be used by third-party users, management, and the Board of Directors. Auditors must be truthful in the investigation process because you don’t want to mislead others with false information; this could damage the companies reputation.
Auditors face a number of legal challenges. It is subject to new regulations and the profession finds itself the target of a difficult litigation and regulatory enforcement environment. New laws have come into play; most notably the sarbanes oxley act of 2002. Audit firms feel that they are caught in a no-win situation between the demands of regulators, law enforcement, the plaintiff’s bar, and their clients (U.S. Chamber of Commerce). However most importantly; auditors must know that they have a very important role when it comes to being truthful on the audit and providing the most reliable evidence that they have gathered.
Philippians chapter four, verses eight through nine says, Finally brothers, whatever is true, whatever is honorable, whatever is just, whatever is pure, whatever is lovely, whatever is commendable, if there is any excellence, if there is anything worthy of praise, think about these things. What have you learned and received and heard and seen in me – practice these things, and the God of peace will be with you.