I want this assignment to be done very carefully as it carries 20 marks,which will be added in my final exam. Plagiarism is strictly checked and prohibited with a software nowadays.so plzz avoid...

PART A
Q. What are the significant and pervasive audit deficiencies within accounting
firms? Discuss. How can these deficiencies be rectified.
Ans:
Significant and pervasive audit deficiencies within accounting firms
It has become very common to use audit techniques and audit programs of third party for
maintaining audit materials. This practice is considered very economical and effective for
issuance of audit programs. Some audit firms have made a standard audit checklist and these
checklists are implemented to conduct audit of the organizations. Due to standardized audit
checklist, auditors can face over sight of areas having material risks in the organization. As the
check standardized audit checklist does not covers the risk found in different organization, there
are chances that auditor may face audit risk after completion of audit.
Audit programs or audit checklists are useful tools for conducting audits but these are not only
the end and surety that after completing audit program or audit checklist audit has completed
and no material risk have left behind. These checklists or audit programs can be considered
only helpful audit tools. The use of these aids and tools are not alternate of professional
judgment of auditor that is used to identify potential risk found in different organizations and
can be judged through supervision and proper review. An audit firm should use these tools with
extensive care. These should not be used unless completely understanding the audit scope.
Audit firms should make efforts to completely know the threats and risk of the organizations
efore finalization of audit checklists so that auditor should be in a position to express his
independent opinion as per the auditing standards. Standardized audit checklists and audit
programs are the generalized techniques. These do not prove complete and sufficient for the
audit requirement of all the organizations.
In the audit firms, it is also a perception that standardized audit programs and checklists have
increased the problems of small audits. These techniques have made it difficult to reduce the
audit work due to which downsizing of staff has become impossible. These limitations have
increased the firms not to elect these techniques or implementing portion thereof.
There is no issue with audit firms to develop alternate processes, techniques and approaches to
conduct audit. This way increases the audit risk for the auditor. Auditors recognize that when
they deviate from the standard audit techniques, there are greater chances that auditor may
face difficulties to review the work of their peers due to non-availability of comprehensive aids.
Audit of Specialized Industry and Reporting requirement
When an audit firms undertakes the audit of an organization operating in an in industry that
equires special reporting, there are great risks involved with this engagement. In such audits,
the client acceptance policies and procedures are important because the firm has to assess its
competencies before going into engagement e.g. audits conducted for organizations operating
under Government control and audits of employees compensation plans. Not having experience
and knowledge of reporting requirements of these types of audits increases the risk that firm
may not give the required audit reports.
Failure of Audit Procedures to Link Risk Assessment
There are common evidences that standardized audit procedures do not meet the audit
equirement of each organization. The risk of e
ors and fraud in each organization vary from
entity to entity. It will not be reasonable to have the same procedure for all entities.
Failure to identify and implement new standards
The audit standards are issued from time to time. Some time, audit firms not implement new
standards. Its consequences may be in the form of disclosure or deficiencies in the audit
eporting.
Inadequate Quality Control System
It is observed that some firms have not effective quality control system due to which
deficiencies found in audit report.
The consequences of non compliance
It is not practicable to develop and implement such quality control procedures and policies that
will eliminate potential deficiencies in audit. It is necessary that efforts should be made to
comply with audit standards in the major areas of audit to reduce the risk of audit failures. The
consequence of non compliance with audit standards may increase potential business risks
which can have negative economic results.
Rectification of deficiencies
These deficiencies can be overcome and rectified by implementing the following actions:-
1. The auditor should design the audit procedures after going through all the business
processes and determining the level of potential risk available in the business regarding
fraud, theft and e
ors.
2. The auditor should design audit procedure in such a way that any noncompliance risk
should be determined and evaluated.
3. The auditors risk assessment techniques should include an expectation that compliance
with business effectiveness should be check and measured.
4. The auditor should determine whether there are any specific government audit
equirements and if so are they are met as per requirements.
5. The auditor should obtain written representation from the management regarding
internal control developed to comply with government requirements.
6. Implementing effective quality control system to meet the specific requirement of
specific organizations under audit.
7. To follow all the audit standards issued from time to time to avail comprehensive audit
material and improve the quality of work.
8. Auditor should review the internal control adopted by management and design audit
program in such a way that risk business areas should be reviewed in more...