Why auditor must to be objective and independent Essay

Why auditor must to be objective and independent - Essay Example In order to successfully carryout this feat, it can be seen that independent auditors play a significant role in the functioning of global capital markets. As such, this paper has been designed to evaluate the main reasons why auditors must be independent and objective in their operations. The main part of the paper will focus on why focus in terms of auditing financial statements of different companies is put on aspects such as objectivity as well as independence of the auditors who carry out different tasks related to financial reporting in the company. According to Kueppers & Sullivan (2010), the audit profession plays a very significant role in the functioning of the global capital markets and it also adds value to various roles played by different stakeholders in financial reporting in an organization. However, the effectiveness of an audit is reflected by the absence of failure of business or fraud after it has been completed. This can be achieved if an independent auditor is h ired to perform such a task in the organization. Ussahawanitchakit (2012, p.1) posits to the effect that during the recent years, â€Å"auditors have become important professions for directly and indirectly promoting the growth of economics in the countries.† These professionals significantly help the stakeholders and other people to assess the value of the firm’s financial information in all aspects of business. This can be achieved through the implementation of accounting and auditing standards that are within the dictates of the financial rules and regulations in a given country (Intakhan and Ussahawanitchakit, 2010). In most cases, independent auditors are more appropriate in carrying out this particular task. In as far as auditing is concerned, it is imperative for the auditors to have some form of independence so that they can impartially dispense their duties. Basically, â€Å"audit independence is defined as an objective and trustworthy arbiter of the fair pre sentation of financial results,† (Falk et al., 1999 as cited in Ussahawanitchakit (2012, p.12). This is a critical factor in the audit profession given that it is comprised of objectivity and is often free from bias. Audit independence is very important in the preparation of financial statements since it helps to generate investor confidence if the financial statement has been carried out by an outsider or independent person. Beattie et al (1999), suggest that in general, audit independence includes independence in fact, which is an unbiased mental attitude of an auditor, and independence in appearance, which is the perception by a reasonable observer that an auditor has no relationship with an audit client which would suggest a conflict of interest audit independence can be achieved if there are no conflicts of interests among the parties involved. It can also be noted that independent auditors are mainly concerned with upholding the principles of ethics, fairness and other p ractices and operations for presenting audit quality which plays a role in improving the quality of auditing that would done. Independent audits are also important since they help to promote fairness in the creation of financial statements and are likely to go a long way in sustaining integrity in terms of financial reporting. Georgiade (2011), states that the responsibilities of the independent auditor when conducting an audit of financial statements in accordance with GAAS include the following: â€Å"Obtain reasonable assurance about whether the financial sta