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    Comparative International Auditing and Corporate Governance: Akuntansi Internasional

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    Steven Alexander Halim
    This document discusses comparative international auditing and corporate governance. It covers recent trends in corporate governance that have led to increased focus on auditing practices. There is significant international diversity in auditing approaches and standards. Efforts have been made toward harmonizing auditing standards through organizations like the OECD, but diversity remains in areas like the purpose of audits, auditing environments across countries, regulation of the profession, and audit report formats. The Sarbanes-Oxley Act in the US introduced new regulations for auditing and corporate governance in response to accounting scandals.

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    Comparative International Auditing and Corporate Governance: Akuntansi Internasional

    Uploaded by

    Steven Alexander Halim
    86 views16 pages
    This document discusses comparative international auditing and corporate governance. It covers recent trends in corporate governance that have led to increased focus on auditing practices. There is significant international diversity in auditing approaches and standards. Efforts have been made toward harmonizing auditing standards through organizations like the OECD, but diversity remains in areas like the purpose of audits, auditing environments across countries, regulation of the profession, and audit report formats. The Sarbanes-Oxley Act in the US introduced new regulations for auditing and corporate governance in response to accounting scandals.

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    This document discusses comparative international auditing and corporate governance. It covers recent trends in corporate governance that have led to increased focus on auditing practices. There is significant international diversity in auditing approaches and standards. Efforts have been made toward harmonizing auditing standards through organizations like the OECD, but diversity remains in areas like the purpose of audits, auditing environments across countries, regulation of the profession, and audit report formats. The Sarbanes-Oxley Act in the US introduced new regulations for auditing and corporate governance in response to accounting scandals.

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    Download as pptx, pdf, or txt
    86 views16 pages

    Comparative International Auditing and Corporate Governance: Akuntansi Internasional

    Uploaded by

    Steven Alexander Halim
    This document discusses comparative international auditing and corporate governance. It covers recent trends in corporate governance that have led to increased focus on auditing practices. There is significant international diversity in auditing approaches and standards. Efforts have been made toward harmonizing auditing standards through organizations like the OECD, but diversity remains in areas like the purpose of audits, auditing environments across countries, regulation of the profession, and audit report formats. The Sarbanes-Oxley Act in the US introduced new regulations for auditing and corporate governance in response to accounting scandals.

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    of 16

    Comparative International

    Auditing and Corporate


    Governance

    AKUNTANSI INTERNASIONAL
    Chapter Topics
     Recent trends in international corporate
    governance.
     International diversity in external auditing.
     Harmonization of international external
    auditing.
     Auditor liability and independence.
     Audit committees.
     International internal auditing.
     Audit regulation.
    Learning Objectives
    1. Define corporate governance and discuss
    the circumstances that caused it to receive
    worldwide attention in recent years.
    2. Explain the link between auditing and
    corporate governance in an international
    context.
    3. Examine international diversity in external
    auditing.
    4. Explain the steps take toward international
    harmonization of auditing standards.
    Learning Objectives
    5. Demonstrate an understanding of the
    issues concerning auditor liability and
    auditor independence.
    6. Explain the role of audit committees.
    7. Discuss internal auditing issues in an
    international context.
    8. Discuss the provisions in the Sarbanes-
    Oxley Act of 2002 in relation to auditing
    issues.
    International Trends in Corporate
    Governance
     Recent accounting scandals, particularly those
    in the U.S. (e.g., Enron, WorldCom) have led to
    increased focus on corporate governance.
     The Sarbanes-Oxley Act of 2002 was a direct

    response to these scandals.


     This act includes new rules pertaining to

    corporate governance and auditing.


     These events in the U.S. are consistent with a

    worldwide movement to improve corporate


    governance and auditing.
    International Trends in Corporate
    Governance
    OECD guidance
     Principles of Corporate Governance (1999)
    provide guidance to help governments improve
    corporate governance within their borders.
     Corporate governance, “…involves a set of

    relationships between a company’s management,


    its board, its shareholders, and other
    stakeholders.”
     These principles also make clear that the board

    of directors has ultimate responsibility for


    governance.
    International Trends in Corporate
    Governance
    OECD guidance
     In 2004, revisions to the corporate
    governance code point out that external
    auditors should answer to shareholders.
     These revisions also highlight the board of

    directors responsibility for overseeing


    financial reporting.
     These revisions also strengthen shareholder

    rights in most OECD member countries.


    International Trends in Corporate
    Governance
    Sarbanes-Oxley Act of 2002
     Public Company Accounting Oversight Board (PCAOB)
    was created to oversee the accounting profession.
     Certification of financial statements by CEOs and CFOs.
     External auditors to report directly to audit committee.
     Restriction on allowable non-audit work for auditors.
     Increased penalties for financial statement fraud.
     The NYSE followed suit by introducing additional listing
    requirements related to corporate governance
    International Diversity in External
    Auditing
    Background
     Globalization is leading to increased importance of
    auditing internationally.
     Significant international diversity exists in various

    aspects of auditing.
     The purpose of external audits varies between

    countries.
     The environment in which auditing takes place

    varies.
     Regulation of the audit function varies.
     The content of audit reports also varies.
    International Diversity in External
    Auditing
    Purpose of auditing
     In the U.S. and UK, the purpose of the
    external audit is to provide assurance that the
    financial statements are fairly presented.
     In the U.S., Sarbanes-Oxley also requires

    audits of internal controls.


     Such a report provides assurance about the

    process of financial statement preparation.


     In Germany, auditors are also responsible for

    evaluating the report of management.


    International Diversity in External
    Auditing
    Purpose of auditing
     Internationalvariation in the purpose of audits
    seems to be related to differences in corporate
    governance structure.
     The supervisory board in Germany has essentially

    equivalent responsibilities to a U.S. board of


    directors.
     German law includes specific regulations about the

    composition of the supervisory board.


     German supervisory boards are more broadly

    representative than their U.S. equivalent.


    International Diversity in External
    Auditing
    Environment of auditing – Culture and history
     Cultures that value saving face and societal
    harmony are less accepting of the questioning
    inherent in auditing.
     Collectivist cultures often distrust outside auditors.
     Recent Chinese history of state-owned enterprises

    is related to explicit limits regarding application of


    lower-of-cost-or-market and allowance for bad
    debts.
     All of these factors can surprise auditors from a

    western perspective.
    International Diversity in External
    Auditing
    Environment of auditing
     Countries with less developed financial infrastructure
    would need less sophisticated auditing.
     When banks or families are the primary source of

    financing, there is less demand for auditing.


     Common law countries tend to have a more influential

    auditing profession relative to code law countries.


     Audit quality and independence are likely to be

    influenced by level of rigor to join the profession and


    by the extent of legal liability assigned to auditors
    International Diversity in External
    Auditing
    Audit regulation
     Auditing in Anglo-Saxon countries has
    historically been self-regulated
     However, recent scandals have led to

    increased government oversight.


     In many other countries (e.g., Germany,

    China) government exercises much more


    control.
     Auditor qualifications vary significantly from

    country to country.
    International Diversity in External
    Auditing
    Audit reports
     The content of audit reports varies significantly
    between countries, and sometimes between
    companies in the same country.
     For example, audit reports sometimes refer to

    local audit standards, non-local audit standards,


    multiple sets of audit standards, or are addressed
    to different audiences.
     The Sarbanes-Oxley Act in the U.S. includes a

    requirement to provide assurance on the internal


    controls.
    to be continued
    TERIMA KASIH

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