Introduction to Auditing

Auditing is the process of assessment and ascertaining of financial, operational, and strategic goals and processes in organizations. Audit helps to determine whether they are in compliance with the stated principles in addition to them being in conformity with organizational and more importantly, regulatory requirements. Indeed, among the objectives of auditing as mentioned above, conformance with regulatory norms and rules and regulations is indeed one of the drivers behind auditing.

Historically and traditionally, conforming with regulatory norms, rules and regulations, has been the main reason why organizations get their financial statements, operational process, and strategic imperatives audited. The culture of a corporate will always be accurately reflected by the public image of a corporation. Therefore, it is very important that good auditing practice should run in the bloodstream of the organization since this in turn will be reflected in the culture. So, an organization whose internal functions are healthy will naturally look healthy from an external perspective.

There is a need for auditors, certifiers, and consultants to be ethical in their dealings with corporates. As was seen in the way the American Energy behemoth Enron collapsed as it was found to be fudging its accounts and indulging in corrupt practices, the main reason that was found was that the auditors and consultants, Arthur Anderson, were in glove with the Enron top management in hoodwinking the regulators and the investor community. Further, the cases of WorldCom, Lehmann Brothers, and Satyam computers in India were examples of corporates that colluded with their auditors, certifiers, and consultants in an attempt to indulge in fraud and get away with it. These examples show us that extreme caution and care have to be exercised by these entities when they deal with the corporates and they must preserve their integrity and independence at all costs.

The point here is that these entities are professionally and by law tasked with the responsibility of protecting stakeholder interests and hence, they must not compromise and betray the faith and trust that is placed on them. It would suffice to state here that there is a fine balance between providing professional advice and auditing the statements in a fair and equitable manner and crossing the line to be conspiring with the corrupt in the corporate world.