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(a) what factors in the auditor-client relationship can put the client in a more powerful position thanthe auditor (b) what measures has and/or can the profession take to reduce the potential consequences of this power imbalance.
2) (a) the factors in the auditor-client relationship that can put the client in a more powerful position than the auditor: a liability can be established for general third parties who are not primary beneficiaries if the third party plaintiff can establish that the auditor demonstrated gross negligence. What factors in the auditor client relationship can put the client in a more powerful position than auditors external auditor in corporate governance the external auditor has long played an important role in the corporate governance function. Keywords: audit quality, auditor-client relationship, auditing in smes, auditing in sweden, international standards on auditing (isa), role of auditor, auditor size, auditor rotation, non-audit services, and auditor independence.
Auditor client relationship and audit quality apart from this, the long-term auditor client relationship has been the center of attention in most of the discussions and debates as well numerous studies have been conducted by the academic researchers, financial and different factors and contexts.
A factor in the auditor-client relationship that could eventually make the client more powerful than the auditor is client knowledge of the process and procedures of an auditor’s job the case indicates how phar-mor hired internal auditors that were previously employed by coopers & lybrand and had previously worked on phar-mor’s audits this situation was phar-mor’s chances to take. Sarbanes-oxley act 2002 limits the ability of corporations to hire employees of their external audit firms sox requires a cooling-off period of one year, after the audit commencement date, before a member of the auditing team can begin work in a key position with the client.
(a) the factors that can lead the client’s power over the auditors in an auditor-client relationship are as follows: • usually financial management of clients selects the auditor, decide their compensation, as well as have the authority itself to terminate the auditor. If the client and the auditor are trying to commit fraud the client would have power over the auditor an imbalance of power in favor of the client exists within the auditor-client relationship primarily because the client hires, compensates and is able to fire the auditor at the client’s discretion.
One factor in the auditor-client relationship that could put the client in a more powerful position is if the auditor is trying to sell additional services to the client, also known as “cross-selling” the client’s power would increase if the auditor is under pressure to get more business.