Do Auditors give favors to clients ????

[smraza]

If they do, then what is the reason behind that ???

S M R

[sajjad_dar2000]

salaam Raza Bahi

Some time they do sometime they don’t. If they have got good relations to the clients then they do the favor, otherwise their job is Auchey Bulai Kam Sai B Keerai Nakalna. Sometime people give them a Bawa G (rupees) to get their favor but only corrupt Auditor accepts the bawa G. I hope you are not one of them who accept the Bawa G<img src=icon_smile.gif border=0 align=middle>. Once an auditor was checking the suppliers’ invoices and he found some unreal invoices. He said to the client 'these invoices look unreal could you give me any other evidence to support these invoices'. Client replied sir open the File No.3, there are some evidence for your query. Auditor opened the file and he found three thousands rupees in the file (three note of 1000). Auditor said to the client, can you plz provide me two more evidence like this<img src=icon_smile_big.gif border=0 align=middle><img src=icon_smile_big.gif border=0 align=middle><img src=icon_smile_big.gif border=0 align=middle>.

Regards
Sajjad Dar




Edited by - sajjad_dar2000 on Nov 06 2003 42045 PM

[jbladeus]

One reason only

Client management to the auditor "If u dont act the way we want u to, then next year we'll get some other auditor. Remember that this is Pakistan u are living in Mr, not the bloody US of A. Nobody including ICAP, SECP or SBP would notice or raise any hue or cry over these petty issues. And if any shareholder in the AGM makes any noise about it, he will be quietened down by our ... ahem... security ppl. So just sign this audit report, take the audit fee and keep your mouth shut."

Auditor to management "Jee sir... jaisa aap kahen. You are maayi baap!"

________________________
Arrrgh... it sure's gonna be mighty rough sailin' today ... mates!

[smraza]

Agreed guybrush,
then what do u think, the auditor's appointment must be in the hands of some other authority ???

S M R

[CBPian]

Good question.... the fact is i ve been wondering since articleship years why this is the case... appointment of auditors and their remuneration should be set by some kind of audit committee of independent directors... i don't think there will be an acceptance of purely alien person appointing them however i agree there needs to be more independence wrt appointments and remuneration.
... in the same vain i have been wondering why not the management letter and internal control report issued to the shareholder and not the management per se?..

[Ammar]

yes
auditor give favour to client
but in this respect tehy got consideration,wheather in monetary
term,(i.e readely convertable to known amount of cash)
and other term
ammar

[smraza]

Yes CBPian,
the main threat to the auditor is that he can get a letter from management at any time that "One of our shareholders has proposed the name of M/s __________________ Chartered Accountants, to be appointed in the forthcoming Annual General Meeting,
ha ha ha
M/L ?????? agreed, It must be printed with the annual accounts of the company.
but u know, if it is done so, then the M/L will be according to the management as well <img src=icon_smile_big.gif border=0 align=middle>

S M R

[jbladeus]

Issuance of Management Letter / ICM to the shareholder is not practical 'cos first of all sometimes it can be 100-200 pages long and it will be kind of improbable for the company to issue an annual report which is so big. Secondly, this letter/memo contains day-to-day operational issues which the general public will not be interested in. And if just a summary of the issues is presented in the the annual report, then it loses its objective altogether.

There was a suggestion some time back that SECP and SBP should appoint the auditors for companies and banks respectively, but that is unacceptable for the smaller firms because in that case, all the business would've gone to the big firms as they have substantial contacts and say in SECP, SBP and in the governemnt.

________________________
Arrrgh... it sure's gonna be mighty rough sailin' today ... mates!

[smraza]

Yup,
as far as the shareholders are concerned, they even dont care about the qualification in the report.
but if any company changes its auditors, then SECP must ask the company that why it is doing so ??? what is the reason behind that????(it can be the case if the auditor's appointment is not in AGM but in BOD meeting, i mean Auditor should be appointed in the board's meeting not in AGM and in fact the auditor is appointed by the board) as in most of the cases the Auditor is changed when he insists on qualification, and in Pakistan Auditor inserts qualification in his report, when nothing has left to do except to qualify the report. When he finds that if he issues a clean report then he will not able to protect his skin from SECP and other authorities, he qualifies the report. Sometimes he tries to insert matter of emphasis.(Hey Guybrush have you gone through the financial statements of Pakland Cement, if not yet then Look at the auditor's report, tell me What do u find amazing in that report??)



S M R

Edited by - smraza on Nov 08 2003 011134 AM

[CBPian]

agreed!!! then what should be done
.. the way out seems only to have some kind of independent body like independent directors and not executive directors making appointment and remuneration decisions...
of course it remains to be seen how independent they can be?

[jbladeus]

No i havent got the Pakland annual report. What's so special about it SMR?

________________________
Arrrgh... it sure's gonna be mighty rough sailin' today ... mates!

[Paki]

somebody said here that we aint living in the US, well let me tell you one thing that the favors they (auditors) do there to the clients are much more titanic than what we do here.
Doing a favor, its based on judgement, you consider the risk associated with doing / not doing the favor and the benefits of doing / not doing the same. I wonder why there is no auditing standard or practical statement for 'doing favors to the client'.

we are all too eager on bringing our governance and other procedures in line with 'gora sahab', what we dont understand is the complete difference of corporate structure 'here' and 'there'. Over with them usually the management and shareholders are largely separate (talking about listed companies) while here they have a greater degree of role in the management (which has both merits and de-merits), so an ML sent to management is actually or can be used by the shareholders (the directors) to bamboo the management, plus the covering letter is also a very important aspect of our audit culture (I dont see why we mention it too much, not even in the standards), it is sent to the board.

Me rulz

[smraza]

<BLOCKQUOTE id=quote><font size=1 face="Verdana, Tahoma, Arial" id=quote>quote<hr height=1 noshade id=quote>I wonder why there is no auditing standard or practical statement for 'doing favors to the client'.<hr height=1 noshade id=quote></BLOCKQUOTE id=quote></font id=quote><font face="Verdana, Tahoma, Arial" size=2 id=quote>
Hey Paki, are u serious about that ????????

S M R

[Paki]

that doesn't matter if I'm serious or not, what matters is, if THEY are!

Me rulz