Presents, the concern environment becomes more complexness. Hence, the demands on the professional audit have been increased in order to supply sensible confidence to users of the company fiscal statement. The external hearers are playing the of import function in society. The of import function of the external hearers is to “perform the audit to obtain sensible confidence about whether the entity maintained effectual control over the fiscal statement” ( Louwers, et al 2008, pp 182 ) and “reducing the information dissymmetry in fiscal statement every bit good as extenuating bureau jobs between the directors and stockholders and between the stockholders and the creditors” ( Al-Ajmi, 2009, pp 64-65 ) [ on-line ] . The external hearers are emphasized by profession organic structures like American Institute of Certified Public Accountants ( AICPA ) , the Securities and Exchange Commission ( SEC ) , Association of the Chartered Certified Accountants ( ACCA ) , Malaysia establishment of Accountancy ( MIA ) , International Federation of the Accountants ( IFAC ) and several professional organic structures with the guidelines on issues of hearers independence parties of the companies to show an professional sentiment in companies finance statement demoing true and just position ( Vanasco, 1996 ) [ Online ] . The external hearers are besides surrounded by other ordinances such as Company Law. Under Section 8 of the Malayan Companies Act province that the external hearers must be a approved by the Minister of Finance as an company hearers for intent of carry oning the statutory of audit. ( Puan Sri Datin Dr. Mary Lee, Tang Seuk Ying, 2007, pp 3 )

Main organic structure

The function of the external hearers is cut downing the bureau job. The hearers are playing function as watchdogs to assist the stockholder proctor the credibleness of the information presented by the direction and confirmation of finance statement is demoing true and just position to the stockholder. In enhance credibleness is the perceptual experience of the external stakeholders that the external hearers express an sentiment in impartial and cut down struggles of involvement ( Wolf.M.F, Tackett.J.A ) [ on-line ] . The external hearer is acknowledging by the profession organic structures in accent on the independency on visual aspect to the company stockholder and the direction as agent ( Wolf.M.F, Tackett.J.A ) [ on-line ] . In the premiss of the bureau theory that agent have more information than rule and have information dissymmetry to the principals involvement because there are adversely affected by the agents ( Adams.M.B. ) [ on-line ] . Pursuant bureau theory The external hearers as an agent to measure the company are traveling concern or exist by showing their profession sentiment in the audit study to the stakeholder and stockholder ( Kleinman.G, Anandarajan.A ) [ on-line ] . In other manus the audit may be failed to be a cut downing the bureau job. This is because the hearers ( agent ) are appointed by the stockholder to make an audit and wage by the company on their service, this will make struggle in finance involvement of the hearers and troubles in the function in cut downing bureau job ( Gavious.I ) [ on-line ] .

Second the function of external hearers as independency profession parties to verification the company fiscal statement. The “Ethic Committee of the IFAC has been emphasis ethical issue about the independency of the auditors” ( Vanasco.R.R ) [ on-line ] . The hearers without independency, the hearers may impact its audit judgement ( Cosserrat.G.w, Rodda.N pp84 ) . The independency it is an attitude or province in head, the hearers independent are hard to find to measure of objectively otherwise merely the action of the hearers can be used in evaluate the hearers are independency ( Vanasco.R.R ) [ on-line ] . “Regulatory and investor have been concerned about the consequence of hearers ‘ increased non-audit service on hearers independency and subsequent earning quality” ( Ho Young Lee ) [ on-line ] . The independency of the hearer the codification of moralss has listed ain by organic structures in scope of the “risks refering existent and perceived independency to the external auditors” ( COSSERAT.G.W, RODDA.N, pp 11 ) . The hearer ‘s kernel independency can “underlie the success and credibleness of the accounting profession to function the public” ( COSSERAT.G.W, RODDA.N, pp 11 ) . After the Enron and Andersen instances ‘ demoing that hearers are failed to independence for provided the audit service to function the populace. This is because of the hearer have close personal relationship with the Enron Chief Accounting Officer ( Thibodeau. J, Freier.D ) . The Andersen audit spouse are provide the non-audit service to their audit client this will conflict involvement particularly when the gross of non-audit service is greater than the audit fee, this will take hearer act upon their sentiment on audit study ( Thibodeau. J, Freier.D ) [ on-line ] ( Gavious.l ) [ on-line ] . “More surprising is that Andersen even maintained a lasting office infinite in the Enron ‘s edifice. In add-on, Andersen employees attended and fall in many events organized under Enron direction. This mark of deficiency of independency ( existent and perceived ) was clear” ( Dewifariha Abdullah @ earnest, pp32 ) .

On other manus the function of hearers have their ain restriction. The first restriction of hearers is clip budget and experience of the hearers. This becomes a portion of influence audit judgement to show an sentiment on the fiscal statement. This will increase fraud hazards or an inability to adequately staff to make an audit gets grounds ( Ciance, Buerstaker, 2009 ) [ on-line ] . The hearer battle are clip limited and supply the non audit are restricted, the audit client will seek act upon the audit fees to the external hearer to supply the unqualified study ( Gavious.I, 2006 ) . Addition from the client ‘s clip force per unit area, the hearer may do professional judgement of grants ( Ciance, Buerstaker, 2009 ) [ on-line ] . The negative clip force per unit area may impact the less experience hearers to acquire adequate grounds by go throughing the every audit phase without a completion of audit work and to cut down the clip comparison to existent clip spend in specific audit work ( Ciance, Buerstaker, 2009 ) [ on-line ] . The hearers may considerate that extra clip spent to make an audit, yet happening important issues in the qualified sentiment, the hearers with topics bordering of the extra audit clip as a “cost” or a “loss” ( Jones.K.T, Chen.C.C, 2005, pp 6-8 ) [ on-line ] . in other manus, hearers may loss map, important audit accommodations may be related to cut down the hazards associated with a steadfast, and the usage of extra clip may be considered appropriate because the company may has received something in return for inordinate audit clip things ( Jones.K.T, Chen.C.C, 2005, pp 6-8 ) [ on-line ] .

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The external hearers is playing an of import function in society to yearss and their besides refering to some regulative to supply a service in society. The external hearers are in bing “auditing criterions refering to the audit rule and model, duties of the hearers, and audit process and quality control” ( Mohamed Nazi Fadzly, Zauwiyah Ahmad, 2004, pp 899 ) . These auditing criterions are non designed to observe fraud other than fiscal statement fraud. The independent hearers are non expected to be expert in hallmark of record and certification with happening “asset fraud, simply material misstatement of the fiscal statement” ( zaibihollah rezaee, 2004, pp138 ) [ on-line ] . Under the Association of Certified Fraud Examiners ( ACFE ) has postulation believe that the fraud may be occurred ( Louwers.T.j, Ramsay.R.J ) . Therefore the hearers holding an outlook spread within the user of fiscal statement with hearers. The user outlook the hearer delivers the fiscal statement are free from fraud ( zaibihollah rezaee, 2004 ) . Now a twenty-four hours the hearers are being challenged and sued by the investor because of the fiscal frauds. The fiscal statement fraud will endure to external hearers in monetarily and reputational of the audit house, when the hearers are failed detected the fiscal statement frauds ( illustration Anderson ) ( zaibihollah rezaee, 2004 ) .

When the external hearers do non run into the client or the fiscal statement users expect, they may be responsible under the common jurisprudence or codified jurisprudence depends on the nature of action and the relationship between the party hearers ( Louwers.T.J, Ramsay.R.J, ) . Under regulative of the Common Law, the external hearers may “lawsuit by brought against hearers on the jurisprudence of contract and civil wrong actions for failure to exert the appropriate degree of professional care” ( Louwers.T.J, Ramsay.R.J, ) . This footing the feature of case originating from the external hearers ‘ is because the hearers are failure to exert the professional attention in making the audit with will impact the terminal user of the finance statement ( Louwers.T.J, Ramsay.R.J, ) . Under common jurisprudence construct are developed through the tribunal determination based on the civil wrong of carelessness, which the carelessness will impact the terminal user of the finance statement ( Schelluch.P, Topple.S 2004 ) . In other manus the hearers ‘ may neglect to carry through the demands by the regulative of the Common Law, in the instance of KPMG had been sued alleges in the performed grossly negligent audits and reappraisals and failed to observe the stuff mistake with regard to New Century ‘s residuary involvement on loans it securitized and on its loan repurchases liability.

The external hearers should hold an ethical behaviour in mine with is “concern to features as honestness and unity, dependability and answerability, every bit good as all other facets of attitude right versus incorrect behavior” ( Konrath.L.F pp35 ) . In the AICPA Code of Professional Conduct is command the quality of scrutinizing and other accounting service ( Konrath.L.F ) . In the MIA the codification of moralss is referred to as MIA by-laws to the hearer to indoctrination of sound professional pattern and the bar of illegal and dishonourable to the professional pattern ( Messier.jr.W.F, Boh.M, 2004 ) . Auditor ‘s judgement of the fiscal statement has a positive impact on the ethical codification and experience ( pflugrath.g, Martinov-Bennie.N, liang Chen, 2007, pp 3-6 ) . The demand of the Code of ethic is associating to unity and objectiveness. Integrity and objectiveness are of import qualities for professional comptroller ( Messier.jr.W.F, Boh.M, 2004 ) . “By-law imposes to all members to obligation to be just, intellectually honest and be free of struggle in their professional work” ( Messier.jr.W.F, Boh.M, 2004, pp565 ) . In the IFAC codification of moralss as mentioned the independency is a cardinal feature of the external hearer in the audit battle ( Messier.jr.W.F, Boh.M, 2004 ) . The codification of the professional moral principle will publish continue the populace to more assurance to the professional ( Dewifariha Abdullah @ Earnest ) . The codification of ethic may include the self-review menace. The hearer must be to move on professional independency of the audit client ( Chong Aik Lee, Angeline Yee Seow Voon, 2007, pp22 ) . Independence of the accounting house is impaired to execute the clerking or makes an history or direction determination for the company and takes a primary duty for client in all fiscal information. In this state of affairs the public accounting may hold double intent because of the public accounting house may supply the finance statement or other information and making an audit on the finance statement to supply audit sentiment on their ain work ( louwers.T.J, Ramsay.R ) .

In the corporate administration, the external hearers pursuant by the Company jurisprudence to look into the fiscal statement are issued by the directors to the stockholder ( Bakar.C.R, 2009 ) . The corporate administration has been defined in the scope of organisational that protects and enhances the stockholder involvement ( Bakar.C.R 2009 ) . In the current position on investor the hearers are assist the investor in concluding determination by supplying the independency professional sentiment ( Bakar.C.R. 2009 ) . The external hearers as assist investor determination devising by heightening the credibleness of fiscal statement ( Bakar.C.R, 2009 ) . The “role of external hearers is to show an sentiment refering whether the fiscal statement give a true and just position of the company ‘s fiscal place and the concluding consequence in operations for the twelvemonth ended” ( Bakar.C.R, 2009, pp 27 ) . In other manus the hearers may neglect to carry through the demand of the corporate administration to look into the fiscal statement are demoing true and just position to the stockholder. In the instance of the Enron and Anderson the hearers is failed in the corporate administration, Although bing blessing process is sound sufficient, to guarantee that the Supreme Audit quality but sometimes unable to observe embezzlements ( Dewifariha Abdullah @ Earnest ) .


The hearer may necessitate to go on keep their profession cognition in the high degree. Their demand to go on to take a classs are supplying by the professional organic structure to keep the high degree of the professional cognition. The hearers may mensurate ever maintain up to day of the month the scrutinizing criterion are their demand to follow up in the clip of the supplying the audit occupation to the client. The hearers need to ever independent in head and visual aspect, to show an sentiment in company finance statement and cut down the hazard of the terminal user of that finance statement. There are besides can non easier influence by other individual in provided the professional sentiment in the audit study.


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