The role of auditors in the financial crisis, part two

The role of auditors in the financial crisis, part two

The role of auditors in the financial crisis of the second part, we want to explain in several parts.

The role of auditors in the financial crisis

Recent financial crises have raised some new questions related to audit plans and methods.

The claim made is that external audit increases the credibility of financial reports.

Such a claim could stem from the view that auditors possess audit knowledge.

Based on that, they are able to disclose privileged information.

The problem with such a hypothesis is that the current financial crisis showed that other companies and banks that were not affected by the current financial crisis were not satisfied with their financial reports even after receiving favorable comments.

As an example of Northern Rock Company in the UK, after receiving a favorable opinion on its 2006 financial reports, it also received an approval report from the company’s internal auditors on July 25, 2007;

to reach a reasonable certainty about the correctness of the performed audit. (European Treasury Stock Committee, 2008)

The studies conducted by (Sika, 2009) show that many banks, even when they received an acceptable opinion on their financial statements, still wanted the support of the government, with these conditions, the credibility of the auditors’ opinion was doubted. took

Here the question raised is why the audit reports have been eroded?

The reason is that the results of audit reports have been exposed to organizational and regulatory policies.

That is, auditors may adjust bank accounts due to the risk of their own interests.

Legislators in the previous bankruptcy of banks believed that the silence of the auditors caused great damage to depositors and customers.

One of the subjects objected to by the auditors was that financial crises have grown suddenly;

And therefore, they were not prepared to judge financial problems.

But the problem with such protest was the important role of capitalist systems in recent crises.

For example, in the United States, the savings crisis was caused by Fine May, which had a history of accounting and auditing.

or the fall of the international commercial and credit bank in Britain (the biggest banking failure of the 20th century) are the reasons for rejecting this claim. (Sika, 2009)

Independence of auditors in the financial crisis

The studies conducted show that audit institutions providing non-audit services inevitably raise many questions about the self-sufficiency and independence of auditors.

which is among the topics that can be discussed in the audit.

It seems that there are contradictions and interferences between the legal and customary role of auditors and other services they provide. (Sika, b. 2008)

Concerns about audit methods and designs have been extended by a number of researchers.

So that the Irish researcher has described auditors as “a joke and a waste of time”.

They consider auditors to be an obstacle for companies to create jobs and they believe that the problems faced by western banks are due to auditors who did not have the necessary independence.

But a number of American experts believe that there is no charge against the auditors during the recent crisis.

Although unlike other crises, this time the auditors were under more pressure (Sikka et al., 2007).

Research and research in auditing and changes in the capitalist system confirms the previously mentioned issues, the results of revenue control and management, the excessive power of auditors and the failure of traditional and old auditing methods.

Auditors still pay little attention to the changes in the capitalist system and the emerging results.

…