Judgment of Auditors Research Paper Example | Topics and Well Written Essays - 2000 words

Judgment of Auditors - Research Paper Example The auditor has to be independent and objective during all the instances that he has to rely upon his judgment to assess the impact of any evidence and should be careful that his independence and objectivity is not impaired. In the start of the audit, the auditor plans his course of work that has to be performed during the audit of any client. During the planning, the auditor accounts for the client business risk, operations, position of the client, financial health and other audit determiners. The level of work that is to be performed by the auditor provides the auditor to plan the work and allocate the working hours of the audit for which the previous year’s hours are taken as a base and a time budget is prepared for the audit to be conducted in a timely manner.   During the preparation of the budget, the managers, as well as the seniors, lay emphasis on the cost control because of the fact that their motivation is provided through the evaluation of their performance. The firm also communicates it to the seniors as well as the managers regarding the fees that the firm will obtain from a particular client and this is communicated well before the preparation of the time budgets so that the short term profitability can be kept in mind. This approach of the auditors impairs the judgment and therefore the independence and the objectivity of the audit as the auditors pay less attention to the audit and exercise lesser judgment and expertise due to lack of time and pressure to complete the work on time. The increased fee pressure tends to decrease the positive impact on the risk assessment of the auditor and that has a direct consequence on the auditor’s judgment which may later impair the objectivity of the audit.