Organization's Ethical Culture Negatively Affects The Audit Quality (Essay Sample)

HOW ORGANIZATION’S ETHICAL CULTURE CAN NEGATIVELY IMPACT ON THE AUDIT QUALITY, AND THE AUDITOR’S COMPLIANCE WITH THE ETHICAL CODE OF CONDUCT
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Quality audit refers to an examination and evaluation of the quality of internal control systems of an organization. An Auditor in his independent capacity is expected to evaluate the processes and controls present in an organization(Moeller 2009, p.556-567). After careful examination of the controls, an Auditor is expected to present a report of his opinion regarding the state of affairs in the organization. There are set standards which an Auditor has to follow in arriving at his Audit opinion. An Auditor has to observe the ethical code of conduct as stipulated by the Auditing and Accounting Standards for all practicing Auditors.
There are instances where the ethical code of conduct is violated. In an organization where the financial reports are prepared in violation of the International Financial Reporting Standards(IFRS) and many omissions are made in recording financial data, Auditor’s may find themselves in a crossroad in cases where the executives are forcing the Auditors to give an unqualified opinion in such cases (Pickett 2010, p.43-68). The executives may have a culture of bribing Auditors in every Audit cycle or using intimidation to ensure that Auditors reports on their favor.
An organization may form a culture of restricting access to important financial records. This may prompt the Auditors to issue incomplete Audit reports which is unethical and does not coincide with the ethical code of conduct (Campbell and Houghton 2005, p.109-219). Such reports do not reflect the true and fair position of the financial activities in an organization. This could be as a result of fraudulent activities which executives are trying to hide.
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