Business Fundamentals

Business Fundamentals

Part 2

Question 1:

Auditing involves examining a firm's financial records and providing an opinion on whether they fairly represent the firm's financial position. One of the key responsibilities of auditors is to ensure that clients are adhering to generally accepted accounting principles.

Some accountants and accounting firms also provide a wide range of management consulting services, including personal financial planning, plant layout and design etc. to the companies which they audit. This at times creates a pressure on the accountants, as they are afraid that disclosing any questionable practices of the company may lead to them losing the other contracts, which pays more money than the auditing job.

The other scenario is when the accountant or the accounting firm has been doing business with a company for long; they tend to build a sociable relation, which can make their judgements in reporting true financial status of the company questionable.

The internal accountants of the company are subject to pressures from higher management for publishing financial statements which show a healthier picture of the company that what actually is.

Such pressures, make the auditing process more vulnerable to frauds, and affect the world outside the company in a much bigger way. It makes decision making process of the investors more difficult. They are afraid and unsure whether to trust a financial report or not. The increasing number of frauds also affects the overall economy of the country.

Question 5:

With the extensive growth of information technology and infrastructure available to companies have the capability of having its activities scattered geographically but still remain coordinated through a networked system. The issues of communication and remote work can be addressed by using the numerous technological advancements that are available today. With the use of electronic conferencing, which allows groups of people to communicate...