The Role of Safeguards in Strengthening Independence Essay - 1

The Role of Safeguards in Strengthening Independence - Essay Example While this is so, manipulation of the auditing bodies is completely inevitable as these bodies are appointed and paid by the client. However, it is possible to optimize independence by neutralizing the threats that put independence at stake. Some threats that affect independence include self interest threats, self review threat, management threats, advocacy threats, familiarity threats and intimidation threats. In this light, designing and deploying effective safeguards will increase the level of auditor independence to and ensure integrity in their work. This can be achieved through the mandatory auditor rotation, peer review, independent auditor appointing, free setting and formulation of effective audit committees. Mandatory Auditor Rotation Mandatory auditor rotation is the act of compelling all financial organizations to adopt and engage a different auditor each financial year to avoid the preference of a single auditor. Often, the management prefers to hire the same auditors every year to ensure that they are able to manipulate them to provide audit results that conform to the will of the management (Chung 2004, p. 8). This inclination of the audit results to the management's opinion undermines independence and reduces the integrity of the end results. In this view, mandatory auditor rotation will ensure that the familiarity and the management threats are suppressed and the audit bodies have a better chance to provide results that reflects the true image of the organization (Chung 2004, p. 8). According to Forbes (2013, Para. 2), the US House of Representatives voted for mandatory auditor rotation as one way of setting the audit bodies free from manipulation. Peer Review In a peer review audit, after the principal au ditor completes the audit process, other qualified professionals evaluate the work to verify its integrity and ensure that the financial statements are in accordance with those of the financial investors. This is a quality assurance process that aims at reducing any errors that may have occurred during the initial accounting process. In addition, this helps to reduce any form of data manipulation that may have been done intentionally under the influence of any independence threat (Allen and Siegel, 2002). Although this process may be quite expensive, it ensures that independence threats are neutralized and more credible results are attained. Independent Auditor appointing and free setting In this process, the role of appointing a professional auditor is withdrawn from the financial investor or client and dedicated to another body. The International Organization of the security commission (2002) states that the role of client in appointing the auditor provides a weakness in the indep endence of the audit results. Often, organizations will choose those auditors that they feel are easy to manipulate or threaten to ensure that they are able to cover up or pursue personal interests by imposing their own opinions on these professionals. To reduce this threat, an independent appointing body should be constituted to ensure that familiarity threats are eliminated by selecting professionals that are least affiliated to the firms. For instance, the government agencies can be chosen to appoint audit bodies for financial investors. Alternatively, shareholder committees should be formulated to take up this role of appointing a credible professional audit body that can provide credible results. In essence, giving this role to an

Production Planning using ERP Essay Example | Topics and Well Written Essays - 1000 words

Production Planning using ERP - Essay Example However it is not widespread these days, it is probable to carry out material requirements planning tasks by hand as well (Waldner & Duffin, 1992, p. 47). MRP is a procedure that comprises a number of fundamental business tasks and information across the business encompassing entire levels in the bill of materials, sales forecasts, sales orders, and inventory. With the help of MRP it can be decided accurately what as well as when materials are necessary to manufacture the most timely as well as competitively priced services and products for customers (GreenTree, 2009) and (Qiang, Khong, San, Jianguo, & Choy, 2001). Beasley (2009) has stated that material requirements planning system is a material planning technique which appeared in 1970s by making use of information technology and computer technology. The major characteristics of material requirements planning are the formation of material necessities by means of exploding the bills of time-phasing and material of requirements by means of posted standard lead times (RockfordConsulting, 2009) and (Beasley, 2009). Material Requirements Planning II is acknowledged as the next generation of material requirements planning and it comprises the characteristics of closed loop system. Through this system the production planning takes the fundamental and main schedule that force the material plan which is the main input to the business or manufacturing capacity plan. Feedback loops proffers input to the elevated levels like a reiterative procedure (RockfordConsulting, 2009). In material requirements planning II operation, forecasts are linked as well a s synchronized for client orders, as well as supplied to the main/master scheduling module. When the master schedule is positioned, the material requirements planning procedure explodes the bills of material, usually on weekends or overnight, also builds up the material requirements. The requirements or materials feed the capacity planning