How Has Management Enabled the Large Audit Firms to Become Leaders in Their Field? 1
HOW HAS MANAGEMENT ENABLED THE LARGE AUDIT FIRMS TO BECOME
LEADERS IN THEIR FIELD?
Student's Name
Course
Professor's Name
University
City (State)
Wednesday, April 12, 2023
, How Has Management Enabled the Large Audit Firms to Become Leaders in Their Field? 2
1.0. CHAPTER 1: Introduction
In the past few years, business entities and other non-profit organizations depended on
accountants from their audit firms to help adjust the journal entries, reconcile the accounts, and
document the financial statements. The starting companies did not have the degree of accounting
comprehension required to carry out these tasks. As a result, they depended on audit firms for
efficient financial statements. Audit firms only provide opinions about the exactness of a
corporation's financial statements.
Audit organizations play a substantial role in validating the finances of business entities. For
instance, before investing in any company, potential investors and lenders acquire information
from audit firms in the form of financial statements related to the company. If investors identify
that the material misstatements of the company are misplaced, they consider not investing in the
company. As a result, most companies across the globe have improved their accounting
expectations and standards to define the roles that audit firms should play.
Audit firms help in rendering opinions on the company's financial statements. Although
some managers have assumed that it is the role and responsibility of audit firms to generate a
company's financial reports, these roles should be performed by the company managers. Audit
firms' primary roles and responsibilities include offering assurance that the corporation's
financial reports are prepared according to the accountancy approach and are free from material
misstatements. Audit firms provide a company with suitable recommendations to fix a company's
financial problems. Also, audit firms generate the appropriate data that offers the company
reasonable assurance. Audit firms also play significant roles in a company by overseeing a
syndicate's work environment and internal and operations controls. In this case, auditors
participate in carrying out the risk evaluation.
Furthermore, audit firms evaluate the digital accounting system of a company and
prevent data compromise from occurring. They compare the company's business to other similar
businesses in the market and denote the irregularities that could result from poor financial
reporting. What is more, audit firms make decisions through the opinions they generate. Audit
firms, therefore, help in rating the company's riskiness. For instance, if a business is risky, the
audit companies collect large amounts of data and examine it before providing their opinion.
Audit firms ensure that they maintain independent attitudes from a company's business. As a
result, auditors can address the audit issues that arise. Importantly, auditors play significant roles
, How Has Management Enabled the Large Audit Firms to Become Leaders in Their Field? 3
in participating in the company's management or serving as the business's officers. Audit firms
do not usually have a financial interest in the company. As such, audit firms ensure that no
auditors play significant roles in a syndicate before beginning the auditing process.
Audit firms take riskier information to obtain sufficient data to compare, confirm, test,
and examine a company's well-being. The procedures conducted by audit firms include
evaluating a company to comprehend its external and internal environment, identifying the
probability of risks occurring and communicating them to the organization, and making
identifying whether there are concerns that raise significant doubts about the company's ability to
progress. The processes also include providing objective advice for advancing the internal
regulations and financial documentation of the company to improve the efficiency and
performance of the company.
Reminding that audit firms are not part of the company’s management is essential. As
such, they do not engage in consummating, executing, or authorizing transactions for a company.
Also, audit firms are not allowed to generate or change the company's source documents, assume
the possessions of the corporation's properties, such as supervising the firm's bank accounts, and
regulate the interior environment of the audit businesses, such as the ongoing activities of the
company. Moreover, audit firms should not supervise workers in a company’s internal
environment, report poor company management to the board of executives, and act as the
corporation’s general counsel. Also, audit firms should not sign the payroll tax returns for the
company, approve the company's invoices, structure a financial management system, and employ
or retrench the company's employees.
Management is critical in ensuring audit firms carry out their roles and responsibilities.
Management has a vital role in ensuring that audits are done effectively. Management helps
ensure that the auditing firm's engagement with the company is more precise by determining the
objectivity and independence of the auditor.
Therefore, the thesis evaluates how efficient management has enabled large audit firms to
become leaders in their field. The analysis uses a systematic literature review research
methodology, which consists of identifying relevant studies in this field, evaluating them, and
incorporating the research findings into the research results and discussion. Databases and online
journals such as PubMed, ERIC, and Google Scholar were used to obtain relevant literature and
periodicals. In the first search, 791 articles were identified. However, only ten peer-reviewed
HOW HAS MANAGEMENT ENABLED THE LARGE AUDIT FIRMS TO BECOME
LEADERS IN THEIR FIELD?
Student's Name
Course
Professor's Name
University
City (State)
Wednesday, April 12, 2023
, How Has Management Enabled the Large Audit Firms to Become Leaders in Their Field? 2
1.0. CHAPTER 1: Introduction
In the past few years, business entities and other non-profit organizations depended on
accountants from their audit firms to help adjust the journal entries, reconcile the accounts, and
document the financial statements. The starting companies did not have the degree of accounting
comprehension required to carry out these tasks. As a result, they depended on audit firms for
efficient financial statements. Audit firms only provide opinions about the exactness of a
corporation's financial statements.
Audit organizations play a substantial role in validating the finances of business entities. For
instance, before investing in any company, potential investors and lenders acquire information
from audit firms in the form of financial statements related to the company. If investors identify
that the material misstatements of the company are misplaced, they consider not investing in the
company. As a result, most companies across the globe have improved their accounting
expectations and standards to define the roles that audit firms should play.
Audit firms help in rendering opinions on the company's financial statements. Although
some managers have assumed that it is the role and responsibility of audit firms to generate a
company's financial reports, these roles should be performed by the company managers. Audit
firms' primary roles and responsibilities include offering assurance that the corporation's
financial reports are prepared according to the accountancy approach and are free from material
misstatements. Audit firms provide a company with suitable recommendations to fix a company's
financial problems. Also, audit firms generate the appropriate data that offers the company
reasonable assurance. Audit firms also play significant roles in a company by overseeing a
syndicate's work environment and internal and operations controls. In this case, auditors
participate in carrying out the risk evaluation.
Furthermore, audit firms evaluate the digital accounting system of a company and
prevent data compromise from occurring. They compare the company's business to other similar
businesses in the market and denote the irregularities that could result from poor financial
reporting. What is more, audit firms make decisions through the opinions they generate. Audit
firms, therefore, help in rating the company's riskiness. For instance, if a business is risky, the
audit companies collect large amounts of data and examine it before providing their opinion.
Audit firms ensure that they maintain independent attitudes from a company's business. As a
result, auditors can address the audit issues that arise. Importantly, auditors play significant roles
, How Has Management Enabled the Large Audit Firms to Become Leaders in Their Field? 3
in participating in the company's management or serving as the business's officers. Audit firms
do not usually have a financial interest in the company. As such, audit firms ensure that no
auditors play significant roles in a syndicate before beginning the auditing process.
Audit firms take riskier information to obtain sufficient data to compare, confirm, test,
and examine a company's well-being. The procedures conducted by audit firms include
evaluating a company to comprehend its external and internal environment, identifying the
probability of risks occurring and communicating them to the organization, and making
identifying whether there are concerns that raise significant doubts about the company's ability to
progress. The processes also include providing objective advice for advancing the internal
regulations and financial documentation of the company to improve the efficiency and
performance of the company.
Reminding that audit firms are not part of the company’s management is essential. As
such, they do not engage in consummating, executing, or authorizing transactions for a company.
Also, audit firms are not allowed to generate or change the company's source documents, assume
the possessions of the corporation's properties, such as supervising the firm's bank accounts, and
regulate the interior environment of the audit businesses, such as the ongoing activities of the
company. Moreover, audit firms should not supervise workers in a company’s internal
environment, report poor company management to the board of executives, and act as the
corporation’s general counsel. Also, audit firms should not sign the payroll tax returns for the
company, approve the company's invoices, structure a financial management system, and employ
or retrench the company's employees.
Management is critical in ensuring audit firms carry out their roles and responsibilities.
Management has a vital role in ensuring that audits are done effectively. Management helps
ensure that the auditing firm's engagement with the company is more precise by determining the
objectivity and independence of the auditor.
Therefore, the thesis evaluates how efficient management has enabled large audit firms to
become leaders in their field. The analysis uses a systematic literature review research
methodology, which consists of identifying relevant studies in this field, evaluating them, and
incorporating the research findings into the research results and discussion. Databases and online
journals such as PubMed, ERIC, and Google Scholar were used to obtain relevant literature and
periodicals. In the first search, 791 articles were identified. However, only ten peer-reviewed
