DEFINATION OF TERMS

2. Discuss the importance of accounting independence in AIS. Give where the concept is important. {20}

3. DEFINATION OF TERMS Accounting Independence (Audit independence) This is where by an accountant is not biased. This means being neutral in the preparation of financial statements. It is a condition of accountant having no bias and being neutral regarding the client or another party in performing the audit function.

4. Accounting Independence (Audit independence) cont.. Some independence guidelines for an accountant engaged in the attest function include: No family relationship with the client’s executive; No financial interest in the company; and No contingent fee based on the type of audit option rendered

5. Importance of Accounting Independence Information reliability requires accountingindependence. Accounting activities must be separate and independent of the functional areas maintaining resources. Accounting supports these functions with information but does not actively participate.

6. Importance of Accounting Independence(cont..) Decisions makers in these functions require that such vital information be supplied by an independent source to ensure its integrity

7. Credibility of financial information An unqualified report by independent external auditors on the account should give credibility and enhance the appeal of the company to investors. • This unqualified report should represent the views of independent experts who are not motivated by personal interests to give a favorable opinion.

8. Threats to professional standards • A lack of independence may lead to a failure to fulfill professional requirements to obtain enough evidence • Failure to do this undermines the credibility of the accountancy profession and standards it enforces

9. Where the concept is important? • Accounting independence is important for the purpose of reliability as accountants perform the following roles with regard to the information system:

10. Where the concept is important? Accountants as users must decide what information must be collected, how it must be processed, and how it must be reported.

11. Accountants as systems designers must work with computer professionals in designing the conceptualsystem while the computer professionals handle the physical system. Keep in mind that the AIS are the custodian of the accountant’s data and the processor of his or her information. The AIS cannot be ignored.

12. Accountants as auditors • must form opinions of the fairness of a company’s financial statements. In recent years the profession has broadened this attest function. • Assurance services include traditional auditing but are also concerned with the quality of information used by decision makers..

13. Accountants as auditors(cont..) Formation of that opinion is dependent on the auditor’s ability to evaluate the accounting system and have confidence that its output is reliable. IT auditing is performed as part of the financial audit to determine the integrity of the organization’s information system. Internal auditors are employees of the organization

14. END OF PRESENTATION CONTRIBUTIONS AND QUESTIONS