Fire Insurance Audits: Ensuring Adequate And Appropriate Coverage

Fire Insurance Audits: Ensuring Adequate And Appropriate Coverage – Auditability describes the auditor’s ability to obtain accurate results in the audit of the company’s financial reporting.

Auditability depends on the company’s financial accounting practices, the transparency of operational reporting, and the honesty of company managers when interacting with their auditors and providing the necessary information.

Fire Insurance Audits: Ensuring Adequate And Appropriate Coverage

Fire Insurance Audits: Ensuring Adequate And Appropriate Coverage

Audits are objective audits whose task is to determine whether the company’s financial statements are correct and factual. In other words, they help prevent fraud and give investors peace of mind that financial statements are basing their buying and selling decisions on an accurate picture of economic performance.

What Is Risk Management?

However, preparing an effective audit is not always easy. Sometimes auditors can be prevented from doing their job properly because they have not received the correct and complete financial information of the company quickly.

The more problems the auditor faces in getting hold of the documents he is responsible for certifying, the fewer opportunities he has to make a reliable, thorough and accurate assessment of the company’s finances.

Auditability depends on the availability of the information needed to perform the audit and that the requested documents are well organized, complete and in accordance with accounting standards.

Auditing includes quality control assessment and risk management. If the management team is unable or unwilling to provide the auditors with information regarding these two areas, the auditor may decide to issue a qualified opinion instead of a pure audit opinion on the company’s financial statements.

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The reputation of auditing quality has come under fire after major global accountancy firms were found guilty of ignoring several high-profile fraud cases.

Other important factors affecting auditability are incomplete company accounting, whether the financial statements are presented in accordance with generally accepted accounting principles (GAAP), and suspected or detected fraud.

It is always recommended to cooperate with auditors as much as possible. Any company that is considered difficult to audit can have a number of adverse consequences.

Fire Insurance Audits: Ensuring Adequate And Appropriate Coverage

First, lenders often require the results of an external audit annually as part of their loan terms. This means that companies guilty of inadequate auditing are vulnerable to legal action and can no longer borrow capital at reasonable interest rates to expand or sustain their business.

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The lack of objective external audits also weakens the opinions. If investors have reason to question the accuracy of a company’s financial reporting and assume that it has something to hide, they are likely to sell their holdings and perhaps even sell the stock short.

Before long, the regulators may also be on the case. Word travels fast when companies don’t follow the rules. If credible excuses are not provided quickly, an investigation can be initiated, which can lead to huge fines.

The questions regarding the quality of the audit have also attracted attention and additional supervision of the auditors themselves. ThePublic Company Accounting Oversight Board (PCAOB), a non-profit organization established by Congress to oversee the auditing process of publicly traded companies, has been investigating major global accounting firms.

These firms include KPMG, Arthur Andersen and Ernst & Young, all of which have come under repeated fire from the PCAOB for failing to identify fraud.

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The corporate scandals at Enron and WorldCom are just two examples of auditors not doing their jobs properly. Instead of certifying these companies as auditable, the accounting firms issued clean, unqualified statements about them in their audit reports.

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Fire Insurance Audits: Ensuring Adequate And Appropriate Coverage

Feature papers represent the most advanced research with significant impact in the field. A Feature Paper should be a significant original article that incorporates multiple techniques or approaches, provides insights for future research directions, and describes potential research applications.

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The existence of an audit expectation gap and its effect on stakeholder trust: The moderating role of the Financial Reporting Council

By Taslima Akther Taslima Akther Scilit Google Scholar 1, 2, * and Fengju Xu Fengju Xu Scilit Google Scholar 1

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Received: 27.6.2019 / Revised: 21.12.2019 / Approved: 30.12.2019 / Published: 25.1.2020

This paper empirically highlights the existence of an audit expectation gap and its effect on stakeholder trust, which is moderated by the active role of the Financial Reporting Council. As a virgin firm, a higher-order model has been constructed to describe the relationship and evaluated using a pragmatic study confounding partial least squares structural equation modeling (PLS-SEM). The data includes 174 respondents as auditors, investors, investment and credit analysts, and regulatory agencies in Bangladesh. The study examines the gap in audit expectations from different perspectives, such as auditors’ responsibility for fraud detection, the meaning and usefulness of the audit report, auditors who offer other than audit services, auditors’ responsibility for business continuity reporting, and also the unfulfilled expectation of the auditor. other verification services, such as verification of other parts of the annual report in addition to the financial statements, such as management discussions and analyses, as well as companies’ social and environmental information. The findings suggest that the audit expectation gap is negatively related to stakeholder trust, and the larger the audit expectation gap is, the lower the stakeholders’ trust in the audit. Auditors who maintain perceived independence and improve the level of communication with users reduce audit expectations while simultaneously instilling stakeholder confidence. In addition, the active role of the Financial Reporting Council acts as a moderator to ensure auditors’ perceived independence. The result of the study motivates decision-makers to focus on users’ audit-related expectations and also emphasizes the importance of independent audit supervision.

Auditing has a necessary financial function to serve the public interest by strengthening confidence in financial reporting (Monroe and Woodliff 1994a; Institue of Chartered Accountants of England and Wales ICAEW 2008). As a result, with the collapse of giants such as Enron and WorldCom, countless changes in the governing structure of statutory auditing have begun since the enactment of the Sarbanes–Oxley Act in 2002, with the goal of restoring confidence in financial statement auditing (Howieson 2013). Baker et al. 2014). Nevertheless, for decades, the auditing profession has been concerned with numerous lawsuits and accusations resulting from auditors’ failure to meet societal expectations, reinforcing the audit expectation gap (AEG), which in turn undermines confidence in the audit function (Porter 1993; Porter and Gowthorpe 2004; Porter et al. 2012). ). Already on the eve of 2018, due to the collapse of the UK-based Carillion Construction Company, a gap in audit expectations has been identified from a last-minute perspective, and users of audit reports are deeply concerned about this (Stephen 2018). The gap in auditors’ expectations is a serious concern for auditors (Stevenson 2019), and the greater the violation of expectations, the weaker the credibility, netting power and valuation of the auditor’s tasks (Sikka et al. 1998)

Fire Insurance Audits: Ensuring Adequate And Appropriate Coverage

“Customers have clear role expectations towards people-oriented service professionals, such as accountants, lawyers, doctors, and they evaluate service encounters based on the perceived role performance of the service provider, and compliance with these expectations is an important basis for evaluating the quality and quality of the service. the effectiveness of the service provided’ (Broderick 1999). Barker (2002) declares that the resilience of society guided by skilled personnel is “the heart of the profession”; Consequently, if such trust is betrayed, professionalism is damaged and auditors become ineffective as a result (Porter et al. 2008). According to a research report by the Financial Reporting Council (FRC 2016), stakeholder trust in auditing is closely related to the level of the audit expectation gap, and trust exists when auditors are believed to act independently of “client companies”. competence and standing for high-level auditing, motivate a combination of relevant principles and rules, and operate in a fair and open market.

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Thus, revitalizing society’s trust in and to audit activities

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