Has the auditor lost its relevance as a profession Literature review

Has the auditor lost its relevance as a profession - Literature review Example The secondary data sources have been used to study the previous studies and the empirical literature on the incompetency of the auditors and the adverse consequences faced the public due to their irresponsible activities. The literature review then assesses the justification of the expenses incurred for the purpose of auditing and the value that has been added as a result of auditing activities. The questions asked on the relevance of auditing function, mainstream and the alternative viewpoints on the topic have been reviewed. The recommendations on the ways of adding relevance to the auditing profession have also been included in this study. Historical background The auditors and their functions of auditing have never in such a limelight as ever before. The occurrence of the global financial crisis has raised concerns in the US, UK, Belgium, Singapore and in many other countries of the effectiveness of the auditing profession in the industry. The economic debacle exposed the ineffic iencies in the auditing practices conducted by the auditors. The US Senate, parliaments in different countries of Europe have started to relook into exploring a new model for auditing practices as its was felt that the auditors and their profession of auditing has lost its relevance in streamlining the business records, identifying the gaps and loophole and help the business to keep fair and transparent financial records for public disclosure. Several companies in the past have been involved in the financial scams where there balance sheets and financial statements have been inflated and thereby misled the investors about the true financial status of the companies. For example, Enron has been earmarked as the biggest audit failure in the history when they showed poor standards in auditing of financial statements mainly due to the mal intentions of their board of directors that led to the incorrect disclosure of financial statements to its shareholders. The eventual fall of performan ce of Enron brought out the truth and finally Enron Corporation went bankrupt. The impacts of failure of auditing were hugely felt during the global financial crisis. The accountability for lack of transparency in the financial statements was affixed to the auditors (Kornberger, Justesen and Mouritsen, 2011, p.525). Hence, the costs incurred and the time and energy spent in the profession of auditing were felt as unnecessary burdens with the advent of control technologies and automated systems to streamline the financial records and information. Methodologies The methodologies adopted for carrying out the activities of auditing is important in establishing the relevance and effectiveness of the auditors. The auditors are the final check points of the financial information to be disclosed to the public after their certification. Thus the methodology adopted by them for evaluating the values of the assets and liabilities of the company in judging the correctness of the financial infor mation is very important. The auditors follow the method of going concern in assessing the value of the assets and liabilities of the companies. This raises the complications in the activities of the auditing profession. The method of going