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Public Accounting Profession

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In their review of the public accounting profession, Lou Harris and Associates warn that an audit report too often is viewed as a "certificate of health" for a company: The report states:

The most serious consequences stemming from such a misunderstanding are that the independent auditor can quickly be portrayed as the force that represents all good in financial accounting and the guarantor of anything positive anyone wants to feel about a given company.

1. Why is public accounting often viewed as a guarantor of results or even as a provider of assurance that one's investment is of high quality?
2. To what extent is it reasonable to view the auditor as a guarantor? Explain.
3. How does the auditing profession work to create or communicate a reasonable set of expectations that users should hold?
4. To what extent do you believe that user expectations of the public accounting profession appear to you to be unwarranted? Explain.

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1. Why is public accounting often viewed as a guarantor of results or even as a provider of assurance that one's investment is of high quality?
1. Public accounting is viewed as a guarantor of results or provider of assurance because:
2. Those accounts that have been audited are perceived to be correct, reliable and indicators of a good future performance.
3. The auditor is now required to comment about the quality of management as well as the intentions as perceived by the auditor. So if the public accountant has audited the books of a company it is assumed that the company has good governance.
4. The auditor is expected to maintain objectivity and fairness and so it is expected that the income and revenues are correct.
5. Currently public accountants are required to comment on the internal controls of the company, so if the public accountant gives a good report it is believed that there are excellent internal control measures in place and there is little likelihood that a fraud is being perpetrated.
6. The investing public believes that any unsafe activities being carried out by the company would be exposed by the public accountant and would be exposed, so the investor does not inadvertently invest in unsafe activities.
7. A public accountant is expected to document and report unethical activities. An investor believes that his investment is of high quality since it has been audited by a public accountant.

The responsibilities that are given to the auditor by the law, especially the Sarbanes Oxley Act of 2002 goes to a great ...

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Article review - Does Selection-Socialization Help to Explain Accountants' Weak Ethical Reasoning?

Does Selection-Socialization Help to Explain Accountants' Weak Ethical Reasoning?
Journal of Business Ethics 42: 71-81, 2003.
2003 Kluwer Academic Publishers. Printed in the Netherlands.
by
Mohammad J. Abdolmohammadi
William J. Read
D. Paul Scarbrough

Read the attached article and provide feedback on the following questions:

1. Explain the purpose of the article and the research method used

2. Explain the major conclusions of the article

3. What is your opinion on these conclusions?

4. Do you think selection socialization exists in public accounting?

5. Do you think accountants have certain characteristics, as indicated in the article? Why or why not?

6. If you agree, what encourages these characteristics?

7. Can that be changed? Should it be changed?

8. If you agree with the article, how can public accounting firms benefit from these findings? If you disagree with the article, what are the implications for public accounting and accounting education?

9. What is your alternative explanation of these findings?

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