Internal Control Essay

5632 Words Jan 26th, 2016 23 Pages
CHAPTER 3
Auditors’ Ethical and Legal Responsibilities
SOLUTIONS FOR REVIEW CHECKPOINTS
3.1

This arises from the three party accountability discussed in chapter 1. The auditor is hired because users expect there may be such a conflict. If users completely trusted management there would be no need to have an auditor.
This is the only way to detect fraudulent or misleading reporting. The logic is to reduce this potential to an acceptable level of risk. If the auditor assumed this risk was zero to start with the auditor would not need to provide evidence that the possibility is low, and that contradicts the reason users demand an audit.

3-2

No, the auditor cannot detect deception without being skeptical. A non-skeptical
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3-5

The rule "Failure to tell the truth is wrong" would (a) require that you not serve as a bank director when a conflict of interest might arise, (b) tell the employer what you know about the forgeries. This rule may be called imperative because it requires the truth regardless of what you might personally feel about the consequences. Strict duty based or imperative theories (e.g., Kant) excuses the individual from undesirable consequences as long as his decisions do not cause other people to be used as means.

3-6

Utilitarian ethics theory requires that a decision maker recognizes value attributes of the consequences of ethical choice alternatives (good v. evil), somehow measure or weigh these, and then decide on the basis of the greater good (or the lesser evil). Duty based ethics does not require that consequences be considered.

3-7

Monastic theories are based on idealizations or simplifications of the real world. The real world is “messy” with the context of a situation, such as whether there is three party or two party accountability, having a major impact on the proper role of an individual. Everyone has multiple social roles in life and it is the conflicts in these multiple roles that seem to cause the most problems

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