What is the difference between an accountant and an Auditor
an Auditor is an accountant but not all accountants are auditors.
The term auditor is protected in law and you must be a member of a recognised qualifying body which is either :
Association of Chartered Certified Accountants (ACCA) Association of International Accountants (AIA) Institute of Chartered Accountants in England and Wales (ICAEW) Institute of Chartered Accountants in Ireland (ICAI) Institute of Chartered Accountants of Scotland (ICAS) Chartered Institute of Public Finance and Accountancy (CIPFA)
Members of AIA and CIPFA can perform audit work only if supervised by one of the other member bodies.
Merely working for an audit form under the supervision of an auditor does not in itself makie you an auditor but it is a required step in working towards becoming an auditor.
Simply being a member of one of the above bodies does not allow you to be an auditor. You also need to have a seperate type of practicing certificate.
Can an auditor give advice
Yes and no.
Also depends on the sort of engagement. Lets assume from the high level of the question that you are talking about a statutory audit.
The auditor must be seen to be independant of the client and the threats to independance are :
Intimidation
Familiararity
Self Review
Advocacy
Management
Self Interest
(I remember that by the acronym IFSAMS which means absolutely nothing but somehow I remember it!).
To give advice can breach several of the theats to independance but the main issue would be that it creates a self review threat in that if the client acts upon advice and then one finds fault in what they have acted upon then the auditor will be less likely to be objective in reviewing their own advice.
One must remember that an auditor must not just be independant but must be seen to be independant of the client so even if the auditor feels that they have not allowed their advice to cloud their opinion (quite litterally in this case) how would such be viewed by a resonably informed third party.
However.The auditor will come accross issues during their work that will need to be communicated to the client such as deficiencies with the clients controls.
Towards the end of the audit process the auditor will provide the client with a management letter (not to be confused with a management representation letter) which details issues and deficiencies encountered during the audit process and offer advice on matters that need to be improved.
For details of this communication see :
ISA260 communicating with those charged with Governance
and
ISA265 communicating deficiencies in internal control to those charged with governance and management.
Any advice given to the client must come from the audit senior, not from anyone further down the food chain as that can result in a disciplinary action by your firm and if a serious breach that caused issue for the firm itself with their supervisory body may result in the auditor in question being subject to disciplinary action including possible exclusion by the body itself (audit issues are taken very seriously).
Hope that answers the question but if not please repost as I quite like ethics questions.
Quite proud of myself now as the only time that I had to refer anywhere else in the above was for the list of RQBs.
kind regards,
Shaun.
p.s. what made you ask?
p.s.2 edited because I had written the answer from the perspective of a statutory audit but forgotten to clarify that such was the angle that I was coming from.
Assurance Engagements and agreed upon procedures are different but I don't think that such was what you were asking.
-- Edited by Shamus on Saturday 2nd of June 2012 06:20:27 PM
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Little titbit for you Shaun from about fifteen years ago. A qualified barrister cum chartered accountant advised a colleague she could use the term 'Partnership Auditor' without fear even without a specific audit qual.
I don't know whether that preceds the legal protection you mention but it shows how difficult it is to protect terminology.
I suppose that's right up there with people being able to call themselves internal auditors where they don't actually have any audit qualifications.
According to one of the lectures on Open Tuition Internal Audit is something that you do if you fail your accountancy exams. lol
Actually, they then go on to say that such used to be true but now there are so many unemployed actual accountants that the internal audit function of firms now often employs some top notch qualified people.
I'm assuming that this partnership auditor would not however be able to sign the audit so really they are someone senior, maybe an actual partner, who works under a qualified auditor?
The firm itself must have a licence from one of the RQB's to perform statutory audit work and it can only obtain that where it has suitably qualified members of the relevant body.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
LOL@Internal Auditors. Is that another one. Don't think she was risking her insurance or anything and I doubt she was signing anything. Anyone else thinking of following suit should check with their prof. body, of course.
I've got her email address somewhere so can try to find out more. She was a little short of CA. TBH, I think it was just a bit of cheekiness puffing up her stationary by using that term.
